Mozambique: Port of Maputo expands with South African exports in mind
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Consultant Fitch Solutions expects the central bank of Mozambique to raise interest rates to 15.75% this year and 16.75% in 2023 to fight rising inflation in a context of economic acceleration.
“At Fitch Solutions, we expect the Bank of Mozambique to raise the interest rate by a total of 250 basis points, to 15.75% in 2022,” reads an analysis on the country’s monetary policy, which also predicts that the interest rates will continue to rise in 2023, ending the year at 16.75%.
According to the note sent to clients, to which Lusa has had access, this consultancy owned by the owners of credit-rating agency Fitch Ratings, Mozambique is expected to register annual economic growth of 5.3%, above the average of 4% recorded in the pre- pandemic years.
“Mozambique’s strong economic growth will give the central bank scope to raise interest rates this year. We expect gross domestic product (GDP) to grow by 5.3% this year, supported by investments and production in the gas sector, and above the average of 4% recorded in the five years prior to the pandemic,” the analysts write.
The Monetary Policy Committee of the Bank of Mozambique held its last meeting on May 19 and decided to maintain the monetary policy interest rate (MIMO rate) at 15.25%.
“This decision is supported by the prospects of maintaining single-digit inflation [below 10%] in the medium term, despite the high risks and uncertainties associated with these projections, namely with the war in Ukraine,” the central bank’s Monetary Policy Committee said at the time.
In April, annual inflation “accelerated to 7.9%, against 6.7% in March, reflecting the increase in fuel and food prices”.
“Underlying inflation, which excludes the prices of managed goods and services and of fruits and vegetables, and which is impacted by monetary policy, remains stable.” That is, “for the medium term, inflation is expected to continue” in single digits, moderated, in part, by the stability of the metical, the Mozambican currency .
On the other hand, the Monetary Policy Committee of the Bank of Mozambique in May said: “the prospects of economic growth for 2022 and 2023 are maintained”, with GDP growing by 4.1% in the first quarter of 2022 and with the International Monetary Fund estimating a growth of 3 .8% this year and 5% in 2023.
The next ordinary meeting of the Monetary Policy Committee of the Bank of Mozambique is scheduled for 27 July.
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