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Morocco's central bank left its monetary policy rate at 2.25 percent, citing a positive reaction of financial markets and institutions to the introduction of a more flexible exchange rate system in January along with an improving economy and moderate inflation.


The Bank of Morocco, or Bank Al-Maghrib (BAM), which has kept its rate steady since March 2016, raised its forecast for 2018 economic growth to 3.3 percent from December's forecast of 3.0 percent following growth in 2017 of 4.0 percent due to a 14.8 percent rebound in agriculture while non-agricultural output only rose by 2.7 percent.


This year BAM expects a 2.3 percent rise in agriculture value added while non-agriculture output is expected to continue to rebound and rise by 3.2 percent.


In 2019 overall growth is expected to accelerate to 3.5 percent, slightly down from December's forecast of 3.6 percent.

Last year Morocco saw a strong improvement in exports, which rose 9.4 percent, while tourism receipts rebounded 8.5 percent and remittances from Moroccans abroad up 4.5 percent.


At the same time imports rose 6.4 percent, driven by a 27.4 percent jump in the cost of energy imports, with the current account deficit narrowing to 3.8 percent of Gross Domestic Product from 4.4 percent.


BAM expects exports to continue to rise and travel receipts are forecast to increase by 5.7 percent this year and 5.2 percent in 2019 while remittances should grow 5.0 percent and 4.1 percent, respectively.


Imports are also expected to accelerate to growth of 7.1 percent this year before slowing to 4.2 percent in 2019, and the current account deficit should be around 4 percent in 2018 and 2019.


Assuming foreign direct investment of around 4.4 percent of GDP in 2018 and 3.5 percent in 2019, foreign exchange reserves would amount to around 257.3 billion dirhams in 2018 and 244.4 billion in 2019, enough for 5 months and 26 days of imports and 5 months and 17 days, respectively.


Morocco's inflation rate eased to 1.8 percent in January from 1.9 percent in December after 2017 inflation averaged only 0.7 percent due to a fall in food prices.


"In the medium term inflation will increase while remaining at moderate levels," BAM said, forecasting 2018 inflation of 1.8 percent and 1.5 percent in 2019. Underlying inflation is forecast at 1.4 percent this year and 1.9 percent in 2019 due to a consolidation of domestic demand and a rise in imported inflation.


On Jan. 15 Morocco introduced a more flexible exchange rate system by widening the dirham's fluctuation band to 2.5 percent on either side from 0.3 percent for a total range of 5.0 percent.


The dirham is mainly pegged to the euro but last year BAM reduced the euro weight to 60 percent from 80 percent and raised the U.S. dollar weighing to 40 percent from 20 percent.


Today the dirham was trading at 11.29 to the euro, down 0.7 percent this year.

 

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  • BRVM Investment Days 2018
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