Mozambique: GDP to shrink 1.3% in 2020 as tourism, trade slump – FocusEconomics

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Mozambique: GDP to shrink 1.3% in 2020 as tourism, trade slump – FocusEconomics

2:27 CAT | 26 Aug 2020

FILE- For illustration purposes only. [File photo: Lusa]

FocusEconomics has downgraded its economic forecast for Mozambique, predicting gross domestic product to shrink by 1.3% this year, compared to last month’s estimate of a 0.9% drop, citing the impact of the Covid-19 pandemic.

According to the latest report from the Barcelona-based consultancy, which specialises in Africa, Mozambique’s economy is now set to contract by more than previously projected, after it shrank at the fastest rate in at least a decade in the second quarter.

In a note sent to investors and seen by Lusa, analysts write that the downgrade is mainly due to the worsening performance of the services sector, with activity in the travel and tourism sector collapsing by more than a third and trade falling significantly, amid travel restrictions and the closure of non-essential shops in the country.

Although some of the restrictions introduced under the state of emergency in force have been lifted, economic activity is expected to fall further in the third quarter, after shrinking by 3.3% in the second quarter compared with the same period of 2019. In the first quarter GDP was 1.7% larger than a year earlier.

The Covid-19 pandemic and lockdown measures are expected to weigh heavily on economic activity this year, with production falling for the first time in decades, according to the analysts, who note that “exports, particularly of coal and aluminium, will shrink in a context of weak global demand and investment decisions may be impacted by high [levels of] uncertainty.”

Mozambique’s Ministry of Health on Tuesday reported 68 new infections from the new coronavirus that causes Covid-19, for a cumulative total of 3,508 cases and 21 deaths.

Of the new cases, 65 are in Mozambique nationals and three foreigners: one South African, one Zimbabwean and one French national, data released to the media shows.

In Africa, there have been 27,984 deaths associated with Covid-19 out of around 1.2 million people infected by the new coronavirus in 55 countries, according to the latest statistics.

Worldwide, the pandemic has already claimed at least 813,000 lives and infected more than 23.6 million people in 196 countries and territories.

The disease is transmitted by a new coronavirus detected at the end of December in Wuhan, a city in central China.

Source: Lusa