Morocco is expecting a tough year economically. The Central Bank (BAM) has just published its economic forecast for 2022 and the data are not favourable. The entity states that inflation is expected to reach 5.3%, which means that the Alawi country will enter a slowdown in growth. The data is overwhelming, as in 2021, Moroccan inflation stood at 1.4%.
The reason for this increase is one: the war in Ukraine. This economic slowdown will be mainly due to higher fuel and some food prices as a result of the Russian-Ukrainian conflict.
"The high inflation is mainly driven by higher energy and food prices, as well as accelerating inflation among major trading partners," the institution said in a statement. The initial forecast also confirms that the kingdom will struggle to get out of this situation, because it all depends on how long the Russian invasion lasts. Moreover, it contradicts the data that the Moroccan government had originally expected, namely a 3.2% inflation rate.
The Ukrainian conflict is having major international consequences. The West's various restrictions on Moscow have been countered by increasing the prices of hydrocarbons and other products. It is worth noting that Russia is the largest producer of fossil fuels and other food products, so it can impose whatever price it wants.
Rising costs are causing several countries to find themselves in crisis. Like Morocco, the lack of gas and oil has caused the Maghreb kingdom to look for other solutions, but they have not been able to prevent citizens from noticing the rising prices and protesting against them. A few months ago, hauliers and the transport sector in general went on strike because of rising prices, a situation that is already being seen elsewhere.
But it is not only rising costs that are the main reason. "The slowdown in the economy is fuelled by the international situation, which continues to be marked in particular by the stalemate in the war in Ukraine, but also by the unfavourable weather conditions experienced this year," explains the BAM.
This year, Morocco has faced one of the worst droughts in three decades. The lack of rain has meant that irrigation has not been possible and, as a result, food crops have not been harvested. This situation has led to the North African nation not being able to obtain the same quantities in the agri-food sector and, as a result, shortages are being experienced.
Farmers have experienced a critical situation that has caused them to lose large cereal and legume harvests. In addition, as there was no rain in the autumn and winter, the reservoirs were at low levels and the crisis was further aggravated. "December and January are crucial for the wheat crop, but this year, as there has been no rain, there will be no production and we expect losses of 80%," said Abderrahim Zrouti, a farmer interviewed by the EFE news agency during the crisis period.
The agricultural sector in Morocco is very important. It is one of the main pillars of its economy and this, together with the rising prices of imported commodities, is causing the country's authorities to despair. It is worth noting that the agricultural sector accounts for 14% of the country's GDP.
In response to the crisis, the Moroccan government has doubled the budget for basic commodities. Butane gas, flour and sugar, among others, will be covered by the executive and will now be worth 32 billion dirhams. However, some 1.4 billion dirhams have also been allocated since April to alleviate the effects of the petrol crisis, and are helping to pay road hauliers, some 180,000 workers in this sector, following their strike.