Rabat – Morocco’s inflation could reach an average of nearly 5% this year, but slow to 1.9% in 2023, according to Morocco’s central bank, Bank Al-Maghrib (BAM).
The inflation is primarily caused by the lingering effects of the COVID-induced economic crisis on the global supply chain, coupled with the Ukraine crisis, according to the central bank.
Supply chain disruption and the Ukraine war have sent fuel, fertilizer, and grain prices skyrocketing, with a direct impact on Morocco’s trade deficit.
Morocco’s trade deficit could increase to the equivalent of 5.5% of the country’s Gross Domestic Product (GDP) in 2022, up from 2.6% of GDP in 2021, the bank said. But this could improve in 2023 with the country’s trade deficit increasing by 3.7% of GDP.
Imports costs could increase by 15% in 2022 driven by higher fuel and food prices but could slow down in 2023 an expected stabilization of energy prices.
Morocco’s government recently announced plans to limit food exports to keep the local market well supplied and prevent vegetable prices from increasing. But limiting vegetable exports will directly shrink the country’s foreign currency reserves, because countries will not be buying the Moroccan produce in their own currencies which Moroccan then normally stores.
The North African country moved last year to scrap import duties on imported wheat to keep the local market well supplied and bring wheat prices down. The measure cost Morocco’s foreign currency reserves an estimated $58.6 million in import duties in 2021.
The value of goods and services exported from Morocco could rise by 12.5% in 2022 thanks to increased sales in the automotive and phosphate sectors.
Morocco’s tourism sector is also set to return to pre-pandemic levels throughout 2022 and 2023.
