Mozambique to register economic growth below 4% to 2020, default limits investment – UN

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Mozambique to register economic growth below 4% to 2020, default limits investment – UN

12:23 CAT | 12 Dec 2017

The UN report on the World Situation and Economic Perspectives (WESP) says that financial default and political tensions will limit investment in Mozambique and keep growth in the country below 4 percent all the way to 2020.

“Investment in Mozambique is being limited by the financial default in January and by the high level of debt,” the report released today in New York reads.

“Growth in Mozambique is also going to be hampered by political tensions,” the document adds, foreseeing economic expansion of 4.1 percent this year and a decrease to 3.8 percent and 3.9 percent in 2018 and 2019, respectively.

The report by the UN Department of Economic and Social Affairs, the United Nations Conference on Trade and Development (UNCTAD) and the five regional commissions predicts a reduction in inflation from almost 20 percent last year to 7 percent this year, 6 percent in 2018 and 6.5 percent in the following year.

“The development outlook for Africa remains subject to several risks,” both internal and external, particularly in the financial area.

“From the external point of view, a higher-than-expected increase in global interest rates or an increase in interest rates on sovereign debt securities could reduce access to finance, which in recent years has become an increasingly important source of domestic investment, and jeopardise the sustainability of debt,” the text reads.

The downgrade in export ratings or a reversal in the growth of commodity prices could reduce foreign direct investment and emigrant remittances, which could threaten the recovery, the United Nations analysts suggest.

Internally, they conclude, the greatest risks for African countries, which are expected to grow by 3.5 percent and 3.7 percent over the next two years, are in the absence of adjustment policies for lower commodity prices.

This lack of policies, they note, “could jeopardise macroeconomic stability and the growth trend in many countries” which could also face escalating violence from security threats, “especially in the Sahel and Somalia region, and political instability on the eve of elections in Egypt, Nigeria and South Africa”.

The United Nations report says three percent growth globally, the highest since 2011, should push policymakers to focus on long-term issues.

Source: Lusa