Morocco’s central bank decided to maintain its benchmark interest rate unchanged at 3% as the CPI inflation forecast is consistent with the medium-term price stability objective and the balance of risks remains broadly neutral, the bank said in a statement.
The bank estimates that GDP growth will range between 4.5% and 5.0% in 2013 before slowing down to between 2.5% and 3.5% in 2014 due to falling agriculture output. The latter, however, will be partially offset by stronger output in the non-agro GDP growth (at 4%) despite the uncertainty surrounding non-market activities like construction and mining, the central bank underscored.
On the fiscal side, the budget gap increased to MAD 19.7bn at end-February 2014 from MAD 13.7bn the year before. For the full-year 2014, the budget deficit will narrow to 4.9% of GDP from 5.4% of GDP the year before. The current account gap will also narrow to 7.5% of GDP in 2014 from 7.8% of GDP in 2013, the central bank forecasts.
On inflation and given the government’s decision to liberalise energy prices, the CPI inflation is expected to average 1.8% in 2014 and 2.3% at the end of Q2 2015 before easing to 2.0%.
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