The Pressure on Household Spending in Morocco Remains Strong

On the rise since the beginning of the year, inflationary pressures are weighing on purchasing power and household confidence. This context could reinforce cautious behavior and slow down demand a little more. In March, the increase in outstanding sight deposits of individuals and Moroccans living abroad accelerated to 7% at more than $50 million (501 MMDH). Apart from the last three quarters of 2020, the balance of opinion regarding the future evolution of the financial situation is at its lowest with 8.3 points. Three out of four households consider that the current economic situation is not conducive to the purchase of durable goods.

Household confidence plunged to an all-time low in March, while inflation continued to rise to 5.3% year-over-year. The risk of a further slowdown in household consumption cannot be ruled out. The HCP scenario forecasts a slight upturn in household spending in the second quarter (+1.8%) after an increase of only 0.8% in the first three months of the year.

The pressure on purchasing power and fears linked to unemployment could reinforce cautious behavior and encourage households to build up substantial precautionary savings. This could further dampen consumption. With the exception of the last three quarters of 2020, the balance of opinion regarding the future evolution of the financial situation is at its lowest with 8.3 points. 3 out of 4 households consider that the economic situation is not conducive to the purchase of durable goods in the latest HCP confidence survey.

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7% increase in sight deposits

In March, outstanding sight deposits of individuals and Moroccans living abroad with banks reached 501 MMDH, up 7% year-on-year. The rate of growth has increased slightly compared to January and February, but remains below the rate observed in 2020. Amounts placed in book accounts amounted to 176 MMDH, up 2.3%.

The growth dynamic has weakened since the beginning of the crisis, indicating the impact of the economic situation on the least well-off households. From an annual average of 5.2% between 2015 and 2019 (with increases ranging from 3.6% to 6.7%), growth has slowed to 1.8% in 2020 before rising to 2.9% in 2021.

148,000 jobs destroyed in rural areas

GDP growth is expected to be between 1.5% and 1.7% in 2022, mainly due to updated figures for the cereal crop. The poor harvest would lead to a 10% recession in agricultural GDP. This new episode of drought and the drop in agricultural production contributed to the destruction of 148,000 jobs in the first quarter in rural areas.

In non-farm activities, employers added 90,000 jobs. However, this is still not enough to reduce the unemployment rate, which stood at 12.1 percent in the first quarter.

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(Featured image by stevepb via Pixabay)

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First published in LES ECO.ma, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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