Morocco Economic Forecast

After growing 1.3% in Q1–Q3, GDP increased 1.4% in Q4, according to a preliminary estimate. This implies that the economy expanded 1.3% in 2022 as a whole—the third worst performance in MENA after Lebanon and Yemen, according to our latest forecasts. Heading into 2023, the statistical office projects growth of 3.4% in Q1 2023, as rains in December should have aided agricultural output. That said, the scarce data available has been mixed so far. Although inflation accelerated in Q1 compared to Q4, boding poorly for private spending, industrial output rose in Q1 compared to Q4, according to a business survey conducted by the Central Bank. Meanwhile, unemployment was stable at 12.9% in Q1. In other news, in April, to help ease food prices, the government canceled a value-added tax on agricultural products and raised the wheat subsidy for Black Sea imports.

Inflation decelerated to 8.2% in March from February’s series high of 10.1%. Inflation should continue to decline on average this year as rate hikes kick in and the base effect toughens. If the Russia-Ukraine grain deal expires on 18 May, as planned, inflation should be driven further up. Key risks include the weather and energy prices.