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Mozambique household spending to slow to 1% this year – Fitch

The consultancy Fitch Solutions warned that the growth of consumer spending in Mozambique will slow to 1% this year, well below the 2.4% recorded during the global financial crisis of 2008 and 2009.

“We anticipate that the impact of the Covid-19 pandemic and the subsequent restrictions on circulation enforced to stem the spread of the virus will make consumer spending grow by just 1%, a more negative impact on Mozambican consumption habits than the Great Financial Crisis of 2008/2009, when household spending grew 2.4%,” the analysts write.

In a note sent to clients, to which Lusa has had access, the analysts say they anticipate that, after growing by 6.7% in 2019, the increase in expenses for Mozambicans will be 1% this year, accelerating to 5.3% in 2021.

“Supporting our negative view for 2020 is the general economic outlook for Mozambique, with GDP [gross domestic product] growing only 0.3% compared to 2.3% last year, as well as the outlook for evolution of consumer finances due to unemployment and the prospects for salary developments,” the consultancy argues.

Looking ahead to next year, Fitch Solutions’ analysts are more optimistic. “Although it will take some time for consumers to adapt to the new normal in the short term, the easing of circulation restrictions leads us to project a recovery of household expenditure,” they add.

In a note released on Sunday, the consultancy predicts 0.2% growth in Mozambique this year, “the lowest in the last three decades”, and argues that the 3.3% drop in GDP in the second quarter of this year will be offset by activity in the second semester, with the lifting of lockdown measures.

“Our central forecast is that the end of lockdown, together with robust investment in the wake of the 2019 cyclones and the development of the liquefied natural gas sector, will be sufficient to maintain growth in positive territory in 2020,” Fitch Solutions says.

Also read: Mozambique will be the only southern African country to grow in 2020 – Fitch Solutions

“In 2021, economic growth should accelerate to 3.6%, and the return of people to the markets should guarantee more profits and investments in the services and commerce industry,” the analysts conclude.

Mozambique, which has been operating in a state of emergency for the last five months, has recorded a total of 3,440 cases of infection with the new coronavirus, 21 deaths, and 1,661 people reported to have recovered, according to the latest update.

In Africa, there have been 27,779 confirmed deaths in the more than 1.2 million people infected in 55 countries, according to the most recent statistics on the pandemic

The Covid-19 pandemic has already claimed at least 809,000 lives and infected more than 23.4 million people in 196 countries and territories worldwide, according to a report by the French agency AFP.

The disease is transmitted by a new coronavirus detected in late December in Wuhan, a city in central China.

After Europe succeeded China as the epicentre of the pandemic in February, the American continent now has the most confirmed cases and deaths.

Source: Lusa via Club of Mozambique

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