Despite the very high rates recorded at the start of the year, inflation, essentially driven by food products, should begin to fall very soon. And for good reason, the improvement of certain factors on the international level. However, for Morocco, other internal brakes risk complicating the deal. Explanations.
Will the Moroccan economy be able to take advantage of the expected drop in world prices for oil and certain raw materials to successfully bring down inflation? This is what one is tempted to believe, given the IMF’s latest delivery on the outlook for inflation in Morocco. Indeed, the Bretton Woods Institution hopes that this inflation will not exceed 4.6% in 2023, whereas during the first two months, the High Commission for Planning (HCP) observed an evolution of more than 10% in mean. It is true that the IMF figures are spread over the whole year, but they announce that deflation is in sight.
“What the IMF is telling us is that commodity and oil prices will go down, but is our inflation solely dependent on these factors? This is not the case. As noted by the HCP, we have a local supply problem that no longer meets demand. So we have to get used to structural inflation,” notes economist and tax expert Mohamed Rahj.
interest
“Structural inflation” is now the leitmotif with economists and forecasting organizations. In all, it will remain high this year regardless of the organization. For the government, the inflation rate will be 4.5%, while for Bank Al-Maghrib, it will climb to 6.2%. The HCP increases it to 6.6%, to name just these three. The Bretton Woods institutions, like the World Bank and the IMF, seem less alarmist. When the International Monetary Fund speaks of 4.6%, it means that in reality it is counting on the world economy which should improve, except that inflation in Morocco is now more of an endogenous factor than an exogenous one. “If we see what is currently happening with agricultural products grown in Morocco, we realize that our production is more modeled on the export market,” adds Professor Mohammed Rahj. “Hence, according to him, a necessary revision of this model”.
Subsidies
While waiting to overcome this non-imported inflation, the State seems obliged to review some of its plans. These include, in particular, the abolition of subsidies through the Compensation Fund. The government spokesman had recently quickly denied any possible end to sugar and gas subsidies in 2024, contrary to what is contained in a report by Bank Al-Maghrib. As a reminder, according to the IMF, which has just published its latest delivery forecast for the Kingdom, the Moroccan economy should record a growth rate of 3% in 2023 and 3.1% in 2024. Inflation should reach 4 .6% this year, before falling back to 2.8% in 2024.
MOHAMMED RAHJ
Tax specialist“
We have a problem of supply versus demand”
How do you explain that the IMF anticipates inflation of 4.6% at the end of 2023, whereas for the first two months we are at 10% on average?
The IMF is counting above all on external factors, betting on a drop in commodity prices at the global level, as well as on world oil prices. Seen from this angle, it is logical to expect inflation to fall during the rest of the year. Except that, in the case of Morocco, we are dealing with inflation also largely linked to internal factors. We have a supply versus demand problem. This creates structural inflation. Efforts must therefore be concentrated at this level, in addition to emphasizing the end of this rentier economy, which only benefits a handful of stakeholders. The latter sometimes see their interests more in exports than in satisfying local demand.
Do you think that with the current rhythm, the purchasing power, for example of the middle class, will be able to hold in the long term?
One thing is certain. With the situation we are currently experiencing, the government can think of anything except removing subsidies for certain products such as sugar and gas via the Compensation Fund. The middle class is already sufficiently affected and a good part risks being downgraded. So what if the subsidies are removed? It would be a suicidal decision in the current context, which does not favor him at all.
What solutions then should be recommended in order to deal with this inflation which is now said to be structural?
As I said earlier, we have a rentier economy which continues to hurt the majority very badly. We must finally tackle this evil. The current situation benefits those whose activities are export-oriented. In addition, strict actions are needed to review the consumption system in Morocco. Despite the crisis we are talking about, or water stress and drought, food and water waste continues. It’s very paradoxical and it shows us how much effort we have to make to change many paradigms.
Abashi Shamamba / ECO Inspirations