Moroccan inflation reaches historic level, last witnessed in 1995

Inflation in Morocco has reached its highest level since 1995, according to Bank Al Maghrib’s (BAM) Wali, Abdellatif Jouahri. 

Following the Moroccan Central bank’s decision to maintain the national key rate unchanged, Bank Al Maghrib’s Wali explained this decision in the subsequent press conference this Tuesday afternoon. 

Inflation has risen to 5.9% in Morocco since this April to its highest level since October 1995, said the Wali, adding that “inflationary pressures continue to be driven by external factors,” and that “the trend is expected to continue in the near term, with inflation projected to be at 5.3% over 2022 before decelerating to 2% in 2023.”

“If we are to reason over the medium term, i.e. the 8 quarters over which we look at the inflation trajectory, the return to 2% gives us peace of mind in terms of inflationary pressures,” said Jouahri, reinforcing the bank’s decision that the key rate may not have to be increased.

Jouahri also confirmed that a draft law to regulate the use of cryptocurrencies in Morocco will see the light of day soon. 

Speaking at the press briefing at the end of the bank’s second quarterly meeting for 2022, Jouahri said that a committee is working to put in place an appropriate regulatory framework to combine innovation, technology, and consumer protection, to regulate the use of cryptocurrencies in the Kingdom.

In this regard, the wali of the central bank stressed that several components will be taken into account for the development of this bill, including the global experiences and expertise in the field, noting that a benchmarking is underway with the International Monetary Fund (IMF) and the World Bank to make the necessary consultations in this direction.

Jouahri also noted that this regulatory framework will update the legislation on the fight against money laundering and terrorist financing, two major concerns of crypto regulation in Morocco. 

According to BAM’s predictions, “the growth of the economy is expected to slow down to 1% in 2022,” after a projection of 0.7% last march, which Jouahri attributes to the positive Spring rains that salvaged the late season’s crops. 

With regards to the labor market, Jouahri said that “the economy lost 58,000 jobs in the first quarter of 2022,” and that “the unemployment rate for young people aged between 15 to 24 years old in urban areas is increasing quite significantly.”

The Wali additionally said that the bank expects “exports to improve by 22% in 2022, driven mainly by phosphate sales, which will reach a record MAD 112 billion, and the automobile industry.”

“Travel revenues will experience a gradual recovery and rise from MAD 34.5 billion in 2021 to MAD 54.3 billion in 2022,” says Jouahri, adding that Morocco will not yet be back to its record 2019 level, which reported an approximate MAD 78 billion.