Bank of Mozambique forecasts inflation of between 12.5% and 14.5% this year

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Bank of Mozambique forecasts inflation of between 12.5% and 14.5% this year

10:06 CAT | 25 May 2017

Banco de Moçambique (File photo)

The Bank of Mozambique forecasts that inflation will be between 12.5 and 14.5 percent this year and that gross domestic product (GDP) in the same period will grow between 3 and 4 percent, a source from the institution announced yesterday.

“We are assuming a realistic projection: that Mozambican GDP will grow again in a band of 3 to 4 percent, which, if it happens, means less than the expectations of the Economic and Social Plan” central bank administrator Waldemar de Sousa said. The government’s plan predicts 5 percent growth.

De Sousa was speaking during the National Business Council organized by the Confederation of Economic Associations of Mozambique.

According to the central bank’s projections, inflation, which was 25 percent in 2016, will fall to between 12.5 and 14.5 percent.

De Sousa says it is necessary to pay attention to the risks of domestic circumstances, highlighting, for example, the political and military crisis, which limits the potential of companies and the economy.

The recovery of International Monetary Fund and donors’ trust is also seen as a challenge.

“We are all anxious to see the outcome of the international debt audit. It is crucial that we have the partners back,” de Sousa added, noting that the Mozambican state budget depends on external resources for between 50 and 60 percent of annual income on average.

Mozambique is recovering from a period of economic crisis, marked by a rise in the cost of living, strong devaluation of the metical against the dollar and suspension of direct support to the state budget by international partners.

The Mozambican state has been hampered by the hidden debt scandal between 2013 and 2014, the political and military crisis and natural disasters that undermined last year’s agricultural campaign, leaving more than 1.5 million people in a situation of food insecurity.

Source: Lusa