Mozambique GDP growth revised down to 3.4% because of violence – Standard Bank

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Mozambique GDP growth revised down to 3.4% because of violence – Standard Bank

12:30 CAT | 05 Feb 2020

File photo: Lusa

Standard Bank’s economic studies office has cut its growth forecast for Mozambique because of violence in the north and centre of the country, now anticipating just a 3.4% economic expansion this year.

“We lowered our 2020 forecast for GDP growth by 0.3 percentage points, to 3.4%, to reflect the negative impact of security challenges in certain districts in the northern and central regions of Mozambique,” the economists of the South African bank write.

In its most recent report on African economies, which Lusa has seen, Standard Bank adds: “Afterwards, with investments in natural gas gaining momentum, probably from the second half, we predict that GDP will accelerate to 4.1% next year [2022]”.

Violence in the north and centre of the country also lowered the GDP growth forecast last year by 0.2 percentage points, to 2.3%. From 2024 onwards, the economic expansion should be greater than 10% per year , falling to around 4% over the long term.

However, “limited institutional capacity, shortcomings in the ease of doing business, limited skills in the workforce and the lack of a vibrant private sector may limit participation in liquefied natural gas projects, which poses risks to these long-term forecasts,” the analysts warn.

“A change in mentality and a better allocation of resources could support more inclusive economic growth,” the document concludes. This will prove critical for the almost half of the population who live on less than US$1.90 a day.

The Standard Bank analysis puts Mozambique’s public debt at 106.8% of GDP this year and at 101.6% in 2021.

Source: Lusa