Mozambique’s economy hit the bottom last year and will grow 3.7% this year – Standard Bank

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Mozambique’s economy hit the bottom last year and will grow 3.7% this year – Standard Bank

3:12 CAT | 01 Feb 2019

Standard Bank’s economic studies department today said it considered that Mozambique’s economy had hit the bottom last year, growing only 3.5%, but would recover to 3.7% this year and 3.9% next.

“We estimate that the economy hit bottom last year, with a growth of 3.5%, due to low domestic demand due to the low disposable income of households,” the analysis note reads, while putting the ratio of public debt to GDP at 106.5% at the end of last year.

Standard Banks’ January analysis of sub-Saharan African economies, which Lusa has seen, anticipates that the two forthcoming Rovuma basin liquefied natural gas project Final Investment Decisions will push growth to 3.7% this year and 3.9% in 2020.

“We do not see, however, a significant acceleration of GDP until liquefied natural gas exports begin in 2023,” the bank’s economists say.

The Anadarko project in Area 1 is expected to receive ‘green light’ this semester, and the Exxon-Mobil/ENI-led project is expected to receive the go-ahead in the second half of the year, Standard Bank predicts.

The approval of these projects and their initiation should make the natural resources sector the main driver of the economy and exports.

“With the development of natural gas projects, resource dominance in the economy will emerge. This way, from the point of view of the contribution to exports, natural resources already dominate, with coal accounting for 36% of total exported goods, according to 2017 data,” the note reads.

“With structural reforms to facilitate the conduct of business and to promote investments outside this sector still slow, increasing resources will probably fail to achieve the goal of ensuring more-inclusive economic growth,” the economists conclude.

Source: Lusa