IMF: Morocco’s growth to reach 0.8% in 2022 & 3.1% in 2023

Morocco’s economic growth is expected to slow down to 0.8% in 2022 due to adverse international juncture and rebound to 3.1% the following year, says the International Monetary Fund (IMF) in its latest World economic outlook.

Inflation is expected to reach in the country 6.2% this year before decreasing to 4.1% in 2023, adds the Fund in its updated projections.

Globally, the economy continues to face serious challenges, incurred by the three factors: Russian invasion of Ukraine, a cost-of-living crisis caused by persistent inflation pressures and the slowdown in China.

IMF expects global growth to remain unchanged in 2022 at 3.2 pc and to slow to 2.7 pc in 2023. More than a third of the global economy will contract this year or next, while the three largest economies: the United States, the European Union, and China will continue to stall. In short, the worst is yet to come, and for many people 2023 will feel like a recession.

According to the IMF analysts, Russia’s invasion of Ukraine continues to destabilize the global economy, resulting in a severe energy crisis in Europe that is sharply increasing costs of living and hampering economic activity.

Gas prices in Europe have increased more than four-fold since 2021, with Russia cutting deliveries to less than 20 pc of their 2021 levels, raising the prospect of energy shortages over the next winter and beyond.

More broadly, the conflict has also pushed up food prices on world markets, despite the recent easing after the Black Sea grain deal, causing serious hardship for low-income households worldwide, and especially so in low-income countries.
Persistent and broadening inflation pressures have triggered a rapid and synchronized tightening of monetary conditions, alongside a powerful appreciation of the US dollar against most other currencies. Tighter global monetary and financial conditions will work their way through the economy, weighing demand down and helping to gradually subjugate inflation.

Morocco’s central bank has decided lately to increase its key interest rate by 50 basis points to 2 pc to fight inflationary pressures prompted by higher energy and food prices due to Russia-Ukraine war.

The Moroccan economy continues to suffer from this unfavorable external environment, the repercussions of a severe drought, along with a slowdown in growth and a spike in inflation fueled by external pressures.