Mozambique: Fiscal tightening needed in 2025 to ensure economic stability - IMF
Maputo. [File photo: Twitter / @dapilla16]
IHS Markit told Lusa that Mozambique’s economy will grow 2% this year because of cyclones Kenneth and Idai, anticipating a faster economic recovery in the next two years.
“Mozambique’s growth rate, inflation and the budget deficit for 2019 may be below initial IHS Markit estimates taking into account the impact of cyclones,” said Thea Fourie.
Speaking to Lusa following the revision of the world economic growth projection to 2.6% this year and 2.5% in 2020, the analyst who follows Mozambique’s economy said that after the slowdown to 2% this year, the start of reconstruction efforts may leave economic activity stronger during the second half of this year and then in 2020 and 2021.
The budget deficit this year is expected to advance to 4.5% due to the needs of $3.2 billion (€2.9 billion) for the reconstruction of areas affected by the cyclones, of which $1.2 billion (around €1 billion) have been received.
The IHS maintains its forecast of a further 0.75 point cut in the central bank’s interest rate this year in the context of lower inflation, the analyst said.
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