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Morocco's Inflation Outlook: Bank Al-Maghrib Forecasts a Decline on the Horizon
Morocco's central bank, Bank Al-Maghrib (BAM), envisions a promising trajectory for the country's inflation rate, forecasting a decline from 6.6% in 2022 to an average of 6.1% in 2023. Looking further ahead, the rate is anticipated to decrease even more, reaching 2.4% in both 2024 and 2025, according to BAM's latest report.
In a gradual slowdown since reaching a peak of 10.1% in February of this year, inflation in Morocco was recorded at 4.3% in October. BAM's statement, issued after the conclusion of the quarterly meeting of BAM's Council for the year 2023, reveals that the average inflation rate for this year is expected to settle at 6.1%, showing a slight improvement from 2022's 6.6%.
The projection of a substantial decline in inflation is grounded in various factors, including the anticipated dissipation of external inflationary pressures, the direct impact of fiscal measures outlined in the 2024 budget law, and the gradual implementation of compensation measures outlined in the three-year budget program for 2024-2026. Additionally, the assumption of stable prices for volatile food products contributes to the optimistic outlook. Consequently, inflation is expected to hover around 2.4% in both 2024 and 2025.
Regarding the underlying component of inflation, a similar downward trajectory is expected. Starting at 6.6% in 2022, it is projected to decrease to 5.6% in 2023, further attenuating to 2.4% in 2024 and 2.3% in 2025.
Furthermore, BAM's Council highlighted that medium-term inflation expectations, as reflected in the bank's quarterly survey, have continued to decline throughout the fourth quarter of 2023. The cumulative impact of BAM's recent decisions to raise the key interest rate on monetary conditions and the real economy also remains in effect, further contributing to the positive outlook.
As Morocco looks ahead to the coming years, the nation's inflation rate is poised to witness a notable decline. With a strategic combination of measures and favorable economic conditions, the country is paving the way for a more stable and prosperous future.