Sharp acceleration of inflation in 2022: clarifications from Abdellatif Juahri

The latest forecasts released by the Al-Maghrib bank are surrounded by even more uncertainty than those caused by the pandemic crisis.

This is what Abdellatif Juahri wanted to emphasize during a press briefing organized on the sidelines of the first central bank board meeting for 2022: “We will be following developments very closely to adapt our forecasts as the situation evolves. arises,” the Wali of Al-Maghrib admitted to a wide range of national media. The meeting, which is being held face-to-face for the first time since the onset of the health crisis, provided an opportunity to discuss economic concerns in an uncertain geopolitical context. This “unprecedented” situation, as Abdellatif Juahri describes it, requires constant revision of forecasts.

“We have to cross-check the models that we use in these circumstances with other elements to be able to get numbers close to reality,” said the central bank’s wali, which reports a possible revision to the forecast set next month. and this is in accordance with the development of the situation at the national level, taking into account, in particular, the March precipitation. “If spring crops are preserved, we will exceed 2.5% growth.

That is why we must closely monitor the situation and update our forecasts to adapt monetary policy in a way that best suits the coming economic situation,” says Abdellatif Juahri. The key element discussed at this meeting is inflation. Indeed, Bank Al-Maghrib forecasts a sharp acceleration in inflation in 2022 and a return to a moderate level in 2023. The rate forecast for the current execution is 4.7% against 1.4% in 2021, in addition, in 2023 it should be about 1.9%. As far as the central bank is concerned, the increase in inflation will be mainly driven by external pressures, in particular the impact of the war in Ukraine on the global economy and rising energy and food prices.

“The 4.7% is confirmed by HCP data, which published an annualized rate of 3.6% in February 2022. We will see next June whether there will be an increase or not. Everything also depends on geopolitical elements, in particular a possible embargo on Russian oil … These are elements that need to be updated and which again are surrounded by many uncertainties,” Mr. Juari explained. When asked about a possible stagflation, the Wali of Al-Maghrib Bank answered with a cripple. “There is no stagflation. We are in a phase of confirmed inflationary pressure. We could talk about it in 2019 when we were at 0.2%. The same trend is now being observed in other developed or developing countries. There is inflationary pressure. Taking into account exogenous factors and adverse climatic conditions, economic growth should slow down to 0.7% in 2022. It should accelerate to 4.6% in 2023. Faced with this uncertain context, the Board of Bank Al-Maghrib decided to maintain an accommodative monetary policy orientation and keep the key rate unchanged at 1.50%.

Mohammed VI Investment Fund ready

The Mohammed VI Investment Fund was also invited to the debate. Speaking on this occasion, the Vali of Al-Maghrib Bank indicated that the structure of this mechanism has been finalized. Thus, the launch of the fund will not be long in coming. “The outlines of its functioning are complete, in particular everything related to the management, supervision, rules of operation and the appointment of its manager,” can we get from Mr. Juari. It should be noted that this mechanism is of interest to international organizations.

This is what the first negotiations with international donors came to, in this case with the World Bank, AFESD, the African Development Bank and the EBRD. “These partners can contribute to the fund, not to mention the charities that can also participate in it, whether in the main fund or in thematic funds.” And add that “these organizations can manage these funds, give their assessments of the operations presented, and therefore they can only be sure of how much they can provide Morocco in terms of investment.”

It should be noted that the exchange of views in the Moroccan press with Abdellatif Jouahri focused on possible negotiations with the IMF on a new liquidity precautionary line. A regression that imposes itself in this uncertain situation. According to the Wali of Al-Maghrib Bank, the new line will serve as an airbag in case the global economy deteriorates.

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