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Morocco Experiences Slowdown in Growth of Bank Loans

A general view of the Central Bank of Morocco in Rabat. Reuters
A general view of the Central Bank of Morocco in Rabat. Reuters
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Morocco Experiences Slowdown in Growth of Bank Loans

A general view of the Central Bank of Morocco in Rabat. Reuters
A general view of the Central Bank of Morocco in Rabat. Reuters

Bank lending showed year-on-year growth of 4.5 percent in December 2020 compared to 5.2 percent in November 2020, with an increase in loans to the non-financial sector of 3.9 percent, according to Bank Al-Maghrib (BAM).

“This change reflects the slowdown in the growth of loans to private non-financial corporations from six percent to 4.7 percent and to public non-financial corporations at 0.5 percent, following a +4.4 percent compared to the previous month, BAM explained in its memo on key indicators of monetary statistics for December 2020.

It further highlighted the acceleration in the growth of loans to households from 2.7 percent to 3.4 percent.

The distribution of loans granted to non-financial sector according to the economic purpose indicates a continuous decline in consumer loans from 3.3 percent to 4.2 percent, an acceleration in the growth of loans to real estate by 2.1 percent to 2.5 percent and a decrease in equipment loans of three percent after +1.5 percent.

Meanwhile, the monetary aggregate (M3), which represents the money supply, recorded an annual growth of 8.5 percent in December 2020 compared to 7.7 percent in November 2020, BAM noted in its latest monetary statistics.

This development reflects the increase in the growth of demand deposits at banks to 10.6 percent, the further decrease in term accounts from 12.9 percent to 9.6 percent and the deceleration in the growth of currency in circulation from 20.6 percent to 20.1 percent.

Year-on-year, the M3 increased in December by 2.7 percent to amount to1,486.8 billion dirhams, mainly reflecting the four percent increase in sight deposits with banks and 1.7 percent in accounts term, BAM said.

On the other hand, the evolution of M3 is mainly attributable to the increase in bank credit of 2.1 percent and that of official reserve assets of 9.9 percent, the bank noted.

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US Jobless Claims, Business Activity Keep Economy on Gradual Cooling Path

The sign on a Taco Bell reustaurant advertises "Now Hiring Managers" in Fitchburg, Massachusetts, US, June 12, 2018. REUTERS/Brian Snyder/File Photo Purchase Licensing Rights
The sign on a Taco Bell reustaurant advertises "Now Hiring Managers" in Fitchburg, Massachusetts, US, June 12, 2018. REUTERS/Brian Snyder/File Photo Purchase Licensing Rights
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US Jobless Claims, Business Activity Keep Economy on Gradual Cooling Path

The sign on a Taco Bell reustaurant advertises "Now Hiring Managers" in Fitchburg, Massachusetts, US, June 12, 2018. REUTERS/Brian Snyder/File Photo Purchase Licensing Rights
The sign on a Taco Bell reustaurant advertises "Now Hiring Managers" in Fitchburg, Massachusetts, US, June 12, 2018. REUTERS/Brian Snyder/File Photo Purchase Licensing Rights

The number of Americans filing new applications for unemployment benefits ticked up in the latest week, but appeared to be steadying near a level consistent with a gradual cooling of the labor market that should set the stage for the Federal Reserve to kick off interest rate cuts next month.
A slowdown in overall US business activity this month as firms faced diminished ability to push through price increases added to the evidence that the economy is slowing and inflation is downshifting to a degree that should allow Fed officials to focus more attention on the job market, Reuters reported.

With a rate cut now broadly expected next month, interest rates on home loans have already begun dropping, and that helped fuel a larger-than-expected rebound in existing home sales last month.
Initial claims for state unemployment benefits rose 4,000 to a seasonally adjusted 232,000 for the week ended Aug. 17, the Labor Department said on Thursday. Economists polled by Reuters had forecast 230,000 claims for the latest week.

The latest data should continue to allay fears that the labor market is rapidly deteriorating, first raised after a sharper-than-expected slowdown in job growth in July, which also saw the unemployment rate rise to a post-pandemic high of 4.3%.
Indeed, the latest claims data covers the survey week for this month's employment report from the Labor Department, and the leveling off in new filings points to "a small decline in the unemployment rate in August," Nancy Vanden Houten, lead US economist at Oxford Economics, said in a client note.

"Claims are leveling off on a trend basis, consistent with our view that, while the labor market is softening, it isn't weak enough to warrant anything more than a 25 (basis point) rate cut at the Fed's September meeting," she said.
Fed officials have said they are keenly watching the labor market, aware that waiting too long to cut interest rates could cause serious harm.
Layoffs remain historically low, however, with much of the slowdown in the labor market coming from firms scaling back hiring, trailing an immigration-induced surge in labor supply.

The Fed's 525 basis points worth of rate hikes in 2022 and 2023 are curbing demand.
The US central bank has kept its benchmark overnight interest rate in the current 5.25%-5.50% range for more than a year. With a first rate cut now widely expected at its Sept. 17-18 policy meeting, the market focus is on how large a reduction it will be - a quarter or a half percentage point.
The number of people receiving benefits after an initial week of aid, a proxy for hiring, rose 4,000 to a seasonally adjusted 1.863 million during the week ending Aug. 10, the claims report showed.