Mozambique: Government cuts 2020 GDP forecast to 2.2%-3.8% due to Covid-19

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Mozambique: Government cuts 2020 GDP forecast to 2.2%-3.8% due to Covid-19

2:36 CAT | 23 Mar 2020

File photo: Macauhub

Mozambique’s government has slashed its forecast for economic growth this year due to the covid-19 pandemic, the minister of economy and finance, Adriano Maleiane, announced on Monday.

The forecast for growth in gross domestic product has been cut to 2.2% in a pessimistic scenario and 3.8% in an optimistic one, from the previous 4.8%.

According to the government, the impact of the global slowdown will affect all economic sectors, from the extractive industry to agriculture.

“Some importers of our wood, cotton and shrimp will reduce” orders, said Maleiane.

The tourism sector is among those worst affected: growth of just 0.5% is foreseen this year, against the previous 3%. For the first quarter of this year 500,000 tourists had been expected to arrive in Mozambique, but this has now been slashed to 23,000.

The only way to keep the economy functioning will be by extending loans to companies, said Maleiane.

The announcement of the cut in growth forecasts comes 20 days after the cabinet approved the government’s Five-Year Plan, which is to be debated in the coming weeks by parliament. The document assumed average annual GDP growth of 5.5% between now and 2024, compared to 2.2% last year.

The pandemic caused by the new coronavirus has already forced the Bank of Mozambique to enact several measures.

On Sunday, it introduced credit lines in foreign currency for banks and a relaxation of credit restructuring conditions for bank customers. A week earlier, it had announced the reduction of compulsory reserves required for banks, both in the national currency, the metical, and in foreign currency.

Mozambique on Monday implemented new measures to prevent the spread of Covid-19 that are to be in force for 30 days, including the suspension of issuing of entry visas and the closure of all schools.

The new coronavirus, responsible for the Covid-19 pandemic, has already infected more than 324,000 people worldwide, of which more than 14,300 have died.

Since the outbreak began in China in December, it has spread worldwide, which led the World Health Organization (WHO) to declare a pandemic situation.

Source: Lusa