Morocco’s poorest 10% experienced almost a 30% higher annual inflation compared to the richest 10%. This was mainly because the rising food prices had a greater impact on the poorest households, as they accounted for a larger share of their expenditure.
These figures were given during a roundtable discussion on Tuesday, by Javier Diaz Cassou, a senior economist at the World Bank (WB) in Morocco.
To counteract the impact of rising food and energy prices, Morocco has implemented measures such as providing subsidies on basic necessities and maintaining regulated prices. However, a WB report noted that the poorest and most vulnerable households have suffered the most due to the inflationary pressures.
These pressures include a severe drought and rising commodity prices, which have fueled inflation.
The Moroccan economy experienced a strong post-COVID-19 rebound last year, but it has since faced increasing supply shocks.
The current account deficit has risen from 2.3% to 4.1% of GDP, while real GDP growth has dropped from 7.9% in 2021 to an estimated 1.2% in 2022.
The World Bank economist predicted that Morocco’s economic growth would increase to 3.1% in 2023.
According to the WB report on monitoring the economic situation in Morocco, in the winter of 2023 the primary sector would drive this growth, despite the economic pressures the country faced.
Morocco’s annual inflation peaked at 8.3% in late 2022, due to the war in Ukraine and the reorganization of global supply chains.
the report also mentions that the major reform of social protection planned by the Moroccan government will help target public aid to modest and vulnerable households. Bank Al-Maghrib (BAM) has raised interest rates twice since September 2022, by a total of 100 basis points, as a measure to address the current economic situation.
Going forward, the report suggests that Morocco could complement anti-inflationary measures by introducing structural policies to ease supply constraints, such as addressing bottlenecks in food markets.
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