Mozambique to grow “only 3.4% in 2019” – EIU

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Mozambique to grow “only 3.4% in 2019” – EIU

1:02 CAT | 06 Dec 2018

The Economist Intelligence Unit (EIU) forecasts that Mozambique will grow “only 3.4%” next year, accelerating to 4.5% between 2020 and 2022, with weak performance in various sectors of the economy.

“We expect economic performance to remain sluggish over 2019, with real GDP [gross domestic product] expanding only 3.4%,” experts at the economic analysis unit of the British magazine ‘The Economist’ write.

In an analysis of the country sent to investors and which Lusa has had access to, analysts say that “limited access to financing by farmers will continue to curb growth in the agricultural sector and a drop in coal prices will act as an obstacle to the increase of mining production”.

On the other hand, they add, the government’s financial difficulties and late payments to suppliers “will continue to penalise the banking sector heavily as well as undermining investor confidence”.

From 2023, however, the EIU says the picture will change with the start of production and export of natural gas. “This will give gas to the economy which, by the end of the period under analysis (2023), is expected to grow by 7.5%”.

In a recent report, the EIU assessed Mozambique’s sovereign credit risk at CC, but warned that “the result had worsened by six points due to the increase in liquidity pressures on foreign currency”, and also because of the prospect of continued default on the part of holders of MAM and ProIndicus loans.

“Even if an agreement with holders of public debt securities is reached, an agreement with creditors of US$1.1 billion in syndicated loans is still a long way off,” analysts say, adding that “funding avenues continue severely restricted as long as these issues are not resolved, making the state budget deficit and current account deficit even more risky”.

Source: Lusa