Consultant forecasts 3% growth this year in Mozambique

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Consultant forecasts 3% growth this year in Mozambique

6:12 CAT | 10 Aug 2021

in file CoM

Consultancy Capital Economics is forecasting 3.0% growth in the Mozambican economy this year, but warns of risks to investment stemming from the instability in the north of the country, citing in particular the suspension of the liquefied natural gas [LNG] project.

“In Mozambique, the ‘force majeure’ declaration on a large LNG [liquefied natural gas] project, following repeated attacks by insurgents, is adding new headwinds to an already slow recovery. Abandoning the project would seriously harm the country’s growth prospects and raise real concerns about the public debt,” analysts write in a note seen by Lusa yesterday.

In the document, analysts say that “the desire to invest in Mozambique is in danger, as insurgent attacks continue in the north of the country”.

Capital Economics also presents its forecasts, estimating for this year a 3.0% growth in Mozambique’s GDP, rising to 4.0% in 2022 and 4.5% in 2023.

As for inflation, the London-based consultancy expects the consumer price index to grow 5.5% this year, 5.8% the next and also 5.8% the next.

French oil major TotalEnergies holds a 26.5% share in the liquefied natural gas project under development in northern Mozambique, whose first production and export was scheduled for 2024, but which has been postponed by at least a year following the oil company’s declaration of ‘force majeure’.

The company’s April 26 declaration indicated that it was “unable to fulfil its obligations as a result of the severe deterioration of the security situation in Cabo Delgado”, a matter that was “completely of Total’s control”.

Of the US$20 billion investment (€16.5 billion) – the largest private investment in Africa – 12.5% was expected to be channelled to local companies during the project construction phase.

Source: Lusa