Mozambique to grow only 5.2% this year, its slowest pace this century – Economist

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Mozambique to grow only 5.2% this year, its slowest pace this century – Economist

5:29 CAT | 17 Mar 2016

The Economist Intelligence Unit (EIU), from magazine The Economist, expects growth in Mozambique to be the lowest this century, anticipating an expansion of the real gross domestic product (real GDP*) of 5.2 percent, with growth accelerating to 6.8 percent by 2020.

From 2017 until the end of the decade, real GDP growth “should accelerate to an average of 6.8 percent between 2017 and 2020. The coal industry will be a key driver, as increased production and lower costs should enable the currently operating mines to return to profit.”

“GDP is expected to grow 5.2 percent in 2016, the slowest rate in 15 years, reflecting an even stronger decrease in public spending, relatively low production in the mining sector and the impact of the ‘El Niño’ effect on agricultural production,” experts at the British magazine’s Intelligence Unit say.

The EIU analysts still believe that the investment in new projects in the coal sector “should remain low” because of low coal prices and infrastructure constraints in Mozambique “.

On the other hand, they cbelieve growth may also occur in other mining sectors, such as graphite and titanium, towards the end of the decade.

The growth forecast of 5.2 percent contrasts with the estimate of the Mozambican government, which foresees an economic growth of 7 percent this year, also above the IMF forecast, which expects an acceleration of the economy between 6 and 6.5 percent.

Inflation should settle at 10.3 pecent this year, according to EIU, “driven by the effects of the rapid depreciation of the currency at the end of last year and the negative impact of drought on food prices” and it should slow to less than 5 percent by 2020.

In the ‘Economic Outlook’ on Mozambique, the experts of The Economist’s investigative unit further claim that “the tension between the government and Renamo, the main opposition party, and the weak efforts to improve budget transparency will hamper relations with traditional development partners, but the Government will take adequate steps to preserve the flow of foreign aid. “

The Government’s domestic economic priority of the Government is, says the EIU, ensuring debt sustainability and implementing the package of corrective policies that it has committed to, when Mozambique received a US$286 million loan from the International Monetary Fund (IMF) at the end of last year.

*Real Gross Domestic Product (real GDP) is a macroeconomic measure of the value of economic output adjusted for price changes (i.e., inflation or deflation). This adjustment transforms the money-value measure, nominal GDP, into an index for quantity of total output. (wikipedia)

Source: Lusa