Morocco maintains rate as inflation now seen rebounding

     Morocco’s central bank left its monetary policy rate steady at 2.25 percent and confirmed its forecast from March that inflation should average 0.6 percent this year and raised its forecast for 2020 inflation to average 1.2 percent from an earlier 1.1 percent due to an expected recovery in domestic demand.
      The Bank of Morocco, or Bank Al-Maghrib (BAM), has kept its rate steady since March 2016 and said inflation has remained low in the first four months of the year due to a decline in food prices and to a lesser extent prices of fuels and lubricants.
      Morocco’s inflation rate rose to 0.2 percent in April but averaged minus 0.1 percent in the first four months, down from 1.9 percent in 2018.
      Next year inflation is expected to pick up as domestic demand is seen rising 1.5 percent, up from 0.8 percent in 2019, and 1.1 percent in 2018.
      Since June 2018 BAM had continuously lowered its inflation due to lower food prices and weak domestic demand.
      Morocco’s economy slowed last year due to a general weakening of the global economy, with gross domestic product expanding 3.0 percent from 4.2 percent in 2017.
      BAM raised its forecast for 2019 growth to 2.8 percent from the March forecast of 2.7 percent and the 2020 growth forecast to 4.0 percent from 39 percent, helped by strong sales of phosphates and its derivatives, and a rebound in automotive sales as the PSA plant begins operations in the second half of 2020.
      Imports are expected to slow on lower energy and capital goods imports, and based on the assumption of Gulf states grants of 2 billion dirhams in 2019 and 1.8 billion in 2020, the current account deficit should narrow to 3.1 percent of GDP in 2020 from 4.5 percent in 2019 and 5.5 percent in 2018.

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