Mozambique: GDP to grow 3.7% in 2019; low inflation to allow rate cuts – IHS

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Mozambique: GDP to grow 3.7% in 2019; low inflation to allow rate cuts – IHS

5:08 CAT | 04 Jan 2019

File photo: Lusa

The economic environment in Mozambique will be favourable this year, with the economy growing 3.7% and the central bank lowering its benchmark interest rate to 12% from 15% now, said UK-based IHS Markit Consultants in a note sent on Thursday.

“IHS Markit assumes a favourable macroeconomic environment during this year, based on the principle elections this year go off peacefully,” the firm’s analysts wrote in response to Lusa on the prospects for the country’s economy this year. “Mozambique’s GDP [growth] is expected to stay at 3.7% and low inflation should allow for the continued normalisation of monetary policy by the central bank, whose interest rate may fall to 12% at the end of this year.”

According to the IHS Markit analysts, Mozambique’s currency, the metical, should depreciate slightly against the dollar, thanks to support from higher price for the raw materials it products “and the strong investment flow.”

On the country’s relations with the International Monetary Fund following the recent announcement of an outline agreement on restructuring public debt securities, on which it has been in default since early last year, IHS Markit states: “Relations between the IMF and the Government should continue, but we do not expect any financial support from the Fund until the debt issues are resolved.”

At issue is not only the formal resolution on the agreement relative to $727.5 million in public debt securities, but also “regarding the other hidden loans, in the amount of 1.2 billion dollars, which are also in financial default, and on which there has been no formal announcement.”

Source: Lusa