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Moroccan Growth Outlook Slashed by Fitch


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Fitch Ratings lowered its economic growth forecast for Morocco for the current year from 3.4% earlier to 1.8% due to accelerating inflation, monetary tightening and damage to the agricultural sector.

The agency’s report said that agricultural production will have a larger impact on economic growth than previously expected, as happened in the fourth quarter of last year, when agricultural production fell by 15.1 percent due to drought and the non-farm sector slowed down. up to 2.4%.

The agency’s figures show that the weakness in the non-farm sector was mainly caused by a combination of inflationary pressures and monetary tightening, which weighed on consumption and investment.

Modest agricultural production and a sharp slowdown in the eurozone will also weigh on Morocco’s exports, according to Fitch.

The agency indicated that rainfall was weak in the month of March, and therefore the economy will be affected given the country’s heavy dependence on fallow farming. In addition, rising resource prices and poor filling of dams lead to a decrease in the area under crops. According to the agency, Morocco will increase imports of agricultural and food products this year.

The interest rate is expected to reach 4.5 percent.

Regarding the main interest rate, the agency said that the series of increases will continue, which will limit the growth of borrowing and investment, as the rate is expected to reach 4.5 percent by the end of the year, compared to up to 4 percent as previously expected, and this change is due to a large increase in the inflation rate at the beginning of the year.

The current approved main interest rate is 3 percent, and Al-Maghrib Bank has raised it three times in a row since last September to curb continued record inflation, most recently at 10.1 percent. posting at the end of February.

For the eurozone, Fitch said it will see a sharp slowdown in growth from 3.5 percent in 2022 to 0.4 percent this year, which will affect Morocco’s exports, given that more than two-thirds of those exports go to the old continent. .

And Fitch has raised Morocco’s inflation expectations for the current year to 7.8 percent from 5 percent, which will further constrain household purchasing power, compared to last year’s average of 6.6 percent, the highest level in four decades.

Source: Hespress

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