Covid-19: Mozambican companies estimate losses at US$453 million – CTA

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Covid-19: Mozambican companies estimate losses at US$453 million – CTA

4:19 CAT | 13 Aug 2020

Maputo. [File photo: Lusa]

The Confederation of Economic Associations of Mozambique (CTA) estimates that Mozambican companies have suffered US$453 million (€382.5 million) in billing losses from Covid-19 in the first half of this year.

Speaking today at a press conference, CTA deputy president Álvaro Massingue said that, by the end of the year, losses in the turnover of Mozambican companies would amount to US$951 million (€803 million), or about 7% of gross domestic product (GDP).

“The hotel and tourism sector appears to be worst affected, having registered a downturn in activity of more than 75%,” Massingue said.

The effects of the new coronavirus, he continued, caused a fall of about 65% in the level of business activity in the first six months of this year, and a 49% drop in the Business Robustness Index.

In terms of employment, Covid-19 led to the suspension of 30,000 private sector employment contracts from January to June this year, with the figure projected to reach 63,000 by the end of the year, Massingue added.

“The continuous growth in the number of jobs suspended will be due, essentially, to the sectoral perspectives that will characterise the second half of the year,” he said.

The negative impact of the pandemic on employment has mainly affected tourism and hotels, which saw 40% of jobs suspended, with a tendency to worsen forecast for the coming months.

“Due to the adverse situation effects of Covid-19, the growth of the Mozambican economy in 2020 may slow down compared to the previous year, when it grew by 2.2%,” the CTA vice president commented.

As a consequence of the new coronavirus, GDP growth may fall to 1.1%, in an optimistic scenario, or may fall by 0.5% overall, in a pessimistic scenario.

“The pessimistic scenario is currently considered the most likely, and is based on the structural rigidity of the Mozambican economy, the maintenance of a state of emergency in the second half of the year and the maintenance of entry and exit restrictions on Mozambique’s main trading partners, as is the case with South Africa,” Massinga emphasised.

However, the downward trend may be mitigated, albeit only slightly, by the easing of state of emergency measures and the evolution of the South African economy, which represents about 30% of Mozambique’s foreign trade, Massingue noted.

Mozambique had by Wednesday (August 12) registered 19 deaths among 2,559 cases of Covid-19, which has claimed more than 743,000 lives and infected more than 20.3 million people in 196 countries and territories worldwide, according to an AFP report.

Source: Lusa