Morocco’s Central Bank Maintains Key Rate at 2.25 % & Expects 4.3 % Growth in 2017

Morocco’s Central Bank, Bank Al-Maghrib, decided Tuesday to maintain its key interest rate unchanged at 2.25 % during the third quarterly meeting of its Board of Directors which expects a 4.3% growth in 2017.

After analyzing recent economic developments and reviewing the macroeconomic forecasts, the Board deemed as “appropriate” the decision to uphold the key interest benchmark at 2.25 %, the Central bank said in a statement.

Morocco’s growth in 2017 will benefit from a good crop-year, as the newly revised estimates of the Ministry of Agriculture show that cereal production would reach 96 million quintals, added the statement.

After a decline of 12.8% in 2016, agricultural value added would jump by 14.7% in 2017 and then edge down by 1% in 2018 under an average crop year, underscored the bank’s statement, noting that nonagricultural activities are expected to keep momentum, and their value added would grow from 2.2 percent in 2016 to 2.9% and then to 3.5%.

Bank Al-Maghrib expects GDP to accelerate from 1.2% in 2016 to 4.3% in 2017 before slowing to 3.1% by 2018. According Morocco’s Central Bank outlook, the country’s economy created 74,000 jobs, including 52,000 in agriculture. However, unemployment rate increased by 0.2% point to 9.3%.

Trade deficit widened by 4 percent in the first eight months of the year, mainly as a result of a 30.2% rise in the energy bill. In contrast, after a large increase in 2016, purchases of capital goods fell slightly, dragging down the growth of imports to 5.5%.

Meanwhile, exports accelerated by 6.7% due to improved shipments of agricultural and agri-food products as well as to a rebound in the sales of phosphates and derivatives, while automotive industry exports fell by 1%.

As to tourism receipts, they improved by 4.9% while Moroccan expatriates remittances went up 2.7 %. Under these conditions and taking into account GCC grants to reach 8 billion dirhams in 2017 and 2018, current account deficit is expected to ease from 4.4 % of GDP to 3.9 percent in 2017 and 4% in 2018.

Assuming that FDI inflows would hover around 3.2 percent of GDP in 2017 and 3.6 percent in 2018, foreign exchange reserves are expected to reach 5 months and 22 days of imports of goods and services at the end of 2017 and 5 months and 25 days by the end of 2018.