Mozambique: Recovery to continue, despite adverse backdrop – IMF official

Login

Register

http://www.clubofmozambique.com/

Mozambique: Recovery to continue, despite adverse backdrop – IMF official

4:31 CAT | 18 Oct 2022

File photo: Lusa

The division head at the International Monetary Fund’s African Department said yesterday that Mozambique is expected to continue its economic recovery, accelerating from 1.2 percent in 2020 to 3.8 percent this year, despite the adverse international economic environment.

“In 2021, growth recovered from the 1.2 percent recession in 2020, the first in three decades, and grew by 2.3 percent, based on a robust agricultural sector and the recovery of the services sector. For this year, we expect the economy to continue to strengthen, despite the deteriorating economic environment, and grow by 3.8 percent,” Luc Eyraud said.

Speaking to Lusa following the release in Washington last week of the Regional Economic Outlook for Sub-Saharan Africa, as part of the Annual Meetings of the International Monetary Fund (IMF) and the World Bank, the head of the division that produced the report said that “the authorities have prudently managed economic policies” and stressed that “despite the shocks of the pandemic and security problems in the north of the country, budgetary pressures have been contained”.

The 3.8 percent growth forecast, coming against a backdrop of interest rate hikes by the central bank to keep double digit inflation under control, comes as import prices for fuel are increasing, a cost the government decided to pass on to consumers only gradually, with aid programmes for the most vulnerable and public transport passengers.

In the medium term, the IMF says, “the outlook is good, with significant growth potential, including from large investments in liquefied natural gas, although Mozambique faces significant development challenges, including those arising from climate change”.

The IMF returned to Mozambique this year after suspending budget support due to the so-called hidden debts scandal in 2016, with an ongoing financial assistance programme worth US$460 million aimed at creating budgetary room for government investments in human capital, climate adaptation and infrastructure.

The International Monetary Fund has revised downwards its growth forecast for sub-Saharan Africa, now estimating growth at 3.6% and 3.7% this year and next, with inflation rising to 14.4%.

“In sub-Saharan Africa, the growth outlook is slightly worse than the July forecast, with a decline from 4.7 percent in 2021 to 3.6 percent and 3.7 percent in 2022 and 2023 respectively, representing downward revisions of 0.2 and 0.3 [of a] percentage point,” the World Economic Outlook report reads

This downward revision “reflects lower growth in trading partners, tighter financial and monetary conditions and a negative shift in the terms of trade in commodities”. adds the report, which estimates global economic growth at 3.2 percent this year, down 0.2 of a point from the IMF’s July forecast, and slowing further to 2.7 percent in 2023.

For Mozambique, the growth forecast is 3.7 percent this year and 4.9 percent in 2023.

READ: IMF trims GDP growth forecasts for Mozambique, other Portuguese-language countries in Africa

Source: Lusa