Simplifying Banking Experience: ebankIT partners with FNB Mozambique's digital transformation
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According to Rand Merchant Bank (RMB), the corporate and investment banking arm of FirstRand Bank Limited – of which FNB Mozambique is also a division, divergent growth throughout the year that is heavily dependent on commodity price movements, is expected across the African continent. Geopolitical tensions are also expected to drive various economic indicators again this year.
Despite these and other challenges, continued investment across the Mozambican economy has, however, contributed to a bullish outlook for growth prospects.
“We expect real economic growth to come in at 4.6% in 2023, up from an expected growth rate of 4.0% in 2022,” projects Daniel Kavishe, RMB Africa Economist.
The reduction in global oil prices, barring risks to higher diesel prices, further implies that Mozambique’s sizeable increase in its import bill on account of higher global oil prices – as seen in the second half of 2022, will reverse.
José Banze, FNB Mozambique Logistics sector Relationship Manager RMB adds: “we expect key sectors for growth in 2023 to be logistics, mining (including gas) and agriculture, fishing and the continued recovery of the hospitality sector. Despite the general economic slowdown, the pickup in both gas and coal exports because of the Russia-Ukraine war informs our view that Mozambique’s export growth will continue into 2023.”
The key concern for RMB is the private consumptive sector of the economy.
Adds Kavishe: “Higher inflation, the growing cost of doing business and liquidity constraints will remain particularly challenging for most businesses in 2023. While there is an air of confidence brewing with respect to improving external balances, we reiterate that structurally higher inflation, persistent security attacks, albeit in an isolated area, and erratic weather patterns are risks that will materially derail economic performance.”
The RMB view is for inflation to average 8.7 % in 2023 largely on the back of statistical base effects and already higher interest rates that will contain consumer spend next year. Food inflation will ease relative to 2022, thus supporting the current broader trend of lower inflation in 2023 versus 2022. Furthermore, the raising of the cash reserve requirement, targeted at reducing liquidity in the market, should over time lead to a lower and contained inflation profile.
The bank expects the medium-term inflation outlook to normalise to single-digit territory. However, the risks and uncertainties associated with inflation projections remain high.
“At a domestic level, the growing pressures for an increase in the current public expenditure bill, including salary increases, stand out. Added to that are the uncertainties regarding the impact of climate shocks on the supply and marketing of goods, and the evolution of administered prices, including their effect on the prices of other goods and services”, concludes Kavishe.
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