The Board of Bank Al Maghrib (BAM-central bank) decided to keep the key rate unchanged at 2.25%, following its 2nd quarterly meeting for the year 2019, held on Tuesday in Rabat, the Bank said in a statement. The Board noted that inflation was low during the first four months of the year, with a year-on-year decrease in the consumer price index by 0.1% on average, explaining that this decrease has resulted from the lower prices of volatile food and, to a lesser extent, of oil and lubricants. Such factors will impact inflation evolution throughout 2019, reducing it from 1.9 percent in 2018 to 0.6% , it added. In 2020, inflation would accelerate to 1.2%, driven by its core component which, mainly owing to the expected upturn in domestic demand, would stand at 1.5%, as against the 0.8% rate forecast in 2019 and the 1.1% rate recorded in 2018, the Bank noted. Growth slowed down to 3% in 2018 from 4.2% a year earlier, covering a deceleration from 15.2% to 4% in the agricultural sector and from 2.9% to 2.6% in non-agricultural activities, the same source said. In terms of prospects, added value of the latter should improve, according to Bank Al-Maghrib's forecasts, by 3.6% in 2019 and 3.9% in 2020. On the other hand, taking into account a cereal production estimated by the Ministry of Agriculture at 61 million quintals, agricultural value added would decline by 3.8% in 2019 before increasing by 6 percent in 2020, assuming an average crop year, it said, adding that, under these conditions, overall growth would stand at 2.8% in 2019 and speed up to 4% in 2020. In the labor market, the central bank stressed that domestic economy created, between Q1-2018 and Q1-2019, 15 thousand jobs, as against 116 thousand a year earlier, noting that agriculture lost 152 thousand jobs, while non-agricultural sectors created 167 thousand jobs, almost 40% of which in the retail trade. Taking into account a 0.4% drop in the labor force, the participation rate fell by 0.9 percentage points to 46.2% and unemployment rate fell from 10.5 to 10% nationally, and from 15.6 to 14.5% in urban areas, it said. Regarding external accounts, the Bank underlined that exports continue to perform well, and increased by 4.5% at end-April, largely boosted by the sales of phosphates and derivatives, noting that, at the same time, imports rose by 4.7%, largely driven by higher purchases of capital goods and semi-finished products.
