Mozambique GDP growth revised down to 3.4% because of violence - Standard Bank
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Capital Economics, which tracks Mozambique’s economy, believes that Standard & Poor’s decision to remove the country from financial default opens the door to the IMF and encourages investors.
Virág Fórizs of Capital Economics, a London-based economic analysis firm, told Lusa news agency that “Standard & Poor’s decision to improve Mozambique’s rating [to CCC +] from ‘default’ will improve investor sentiment, help the country gain access to international markets and may reopen the door to an agreement with the International Monetary Fund.”
Standard & Poor’s (S&P) was the third of the three largest rating agencies to remove the country from the default category, giving the country’s economy a stable outlook.
The Capital Economics analyst added that, despite officials wanting to put the hidden debt scandal behind them, “Mozambique’s high debt remains a concern.”
The deal with sovereign debt lenders, he noted, “represents only 4% of the total debt,” but still concluded that: “The country’s economic outlook is good, with the development of investments in the natural gas sector.”
Forecasts of slowdown and rise
The S&P financial rating agency’s document predicts that Mozambique will slow to 2.5% this year, and the government debt-to-gross domestic product ratio will rise to 116.2%.
“This year’s economic performance has been significantly and negatively affected by two tropical cyclones, Idai and Kenneth, which hit Mozambique in March and April 2019. As a result, agriculture and electricity output are likely to be weak for the year because of damage to crops and infrastructure, including Beira port, a major port for commodity exports,” the S&P analysts write.Source: Deutsche Welle
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