The Fitch Solutions consultancy lowered its forecast for the Mozambican economy this year down from 4.3% to 0.7%, taking into account the Covid-19 pandemic and the global recession, while foreseeing a significant recovery in 2021 to 4.2%.
“At Fitch Solutions, we anticipate that Mozambique’s real GDP [gross domestic product] growth will slow from 2.2% in 2019 to 0.7% in 2020,” its report reads. “The Covid-19 pandemic and the global economic crisis will weigh on the demand for exports of raw materials from Mozambique this year,” a factor to which the consultants add “internal weaknesses”.
“The structural weaknesses in private consumption and public investment will be aggravated by the impact of the spread of the virus in various sectors of the economy.”
The expectation of the Fitch Ratings agency economists is that a recovery in exports and the increase in foreign investment in natural gas extraction projects will favour economic recovery from next year on, with GDP growth accelerating to 4.2% “despite the uncertainty over the duration of the pandemic”.
Regarding the Bank of Mozambique’s monetary policy, Fitch Solutions forecasts that the benchmark interest rate, which has already dropped from 21.75% in April 2017 to 11.25% in April this year, will fall further to 10.5% by the end of the year.
By Wednesday (June 3), the Covid-19 death toll in Africa had risen to 4,493, with more than 157,000 cases in 54 countries. Mozambique had reported 316 cases of infection, and two deaths.
Globally, according to a report by the AFP news agency, the Covid-19 pandemic has already claimed more than 382,000 lives and infected more than 6.4 million people in 196 countries and territories. More than 2.7 million patients were considered cured.
The disease is transmitted by a new coronavirus detected in late December in Wuhan, a city in central China.
Source: Lusa via Club of Mozambique