Mozambique: Economy to contract 0.5% in 2019 – Economist Intelligence Unit

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Mozambique: Economy to contract 0.5% in 2019 – Economist Intelligence Unit

10:28 CAT | 15 Aug 2019

in file CoM

The Economist Intelligence Unit (EIU) has improved its economic recession forecast for Mozambique this year, now anticipating negative growth of only 0.5% this year and an expansion of 3% next year.

“The cyclones earlier this year caused damage to infrastructure, buildings, ports and agriculture, which will weigh on the country’s growth this year and next,” experts from the economic analysis unit of the British magazine The Economist wrote.

In a note on Mozambique’s economy, sent to customers and to which Lusa had access, analysts anticipate “a contraction of 0.5% in 2019, before a recovery in 2020, with growth of 3%,” which will cause real GDP growth to accelerate to an average of 5.6% between 2021 and 2022.

Analysts’ forecasts are considerably better than those made at the end of June when they predicted a recession of 2.2% this year and a growth of 2.7% next year.

“The gas industry will probably be the biggest engine of economic expansion, with ExxonMobil and Anadarko planning large natural gas export plants, and Eni building an equivalent plant off the coast,” analysts said.

Politically, the EIU analysis highlights the dominance of the presidential and parliamentary elections on 15 October and the peace negotiations between the two main political parties in the country.

“The ruling Frelimo party will have to overcome voters’ frustrations over high unemployment and limited economic opportunities, with budget policy continuing to try to raise living standards to stem these tensions,” they said.

They said that Frelimo “will continue to exercise its dominance in politics and its influence over state institutions and the media will be an advantage,” and therefore expect to win the autumn elections.

Source: Lusa