Consultant Fitch Solutions yesterday forecast that Mozambique’s economy will almost double its growth this year, registering an expansion of 4.3%, compared to 2.2% in 2019.
“Following the slowdown in GDP [growth] to 2.2% in 2019, we expect the Mozambican economy to expand 4.3% in 2020 and 4.4% in 2021,” analysts of the consultancy owned by the same group which owns of the Fitch financial rating agency write.”
“In the bulletin sent to customers, to which Lusa has had access, analysts write that “last year, cyclones Idai and Kenneth, in addition to heavy rains, hurt agricultural production and the income of 71.3% of the workforce, limiting private consumption and causing disruptions to mining production and exports.”
Even so, they add, “the expectation is that the impact of cyclones will be temporary, with economic activity recovering in the coming quarters”.
Exports in the natural gas sector, they say, will expand strongly in 2022, “but will remain limited without external budget support”, recalling that between 2007 and 2016, “an average of 53.7% of public investment had external financing, which sustained a GDP growth of on average, 6.7% in this period”.
Analysts note that the agreement with the International Monetary Fund (IMF) to start talks on a financial support programme is positive, and that “reforms attached to financing can lead to both an increase in public spending and an improvement in the economic sentiment of foreign investors, increasing Mozambican economic growth in the long term”.
However, they conclude, “the risks to this forecast remain high”, due to infrastructure limitations and concerns about corruption and insecurity, and given that “an escalation in political violence or insurgent activity in the north of the country may limit investment and postpone exports of liquefied natural gas”.
Source: Lusa via Club of Mozambique