Mozambique’s new growth forecast “too optimistic”, says The Economist

Login

Register

http://www.clubofmozambique.com/

Mozambique’s new growth forecast “too optimistic”, says The Economist

3:09 CAT | 12 Jul 2016

The Economist Intelligence Unit, the analysis team linked to The Economist periodical, wrote yesterday that the government of Mozambique’s economic growth forecast of 4.5 percent for the year is “too optimistic”, and anticipating instead growth of no more than 3.8 percent.

“Given the economic headwinds facing the country, we believe that the government’s new projection of economic growth is still too optimistic,” the experts write.

The analysts write that the slowdown from 7 percent to 4.5 percent expected by the government “follows a decade in which GDP grew an average of 7 percent, based on a rapid growth of the mining sector, high levels of debt and public spending financed by foreign aid and an increase in foreign investment in the energy sector”.

The economic slowdown in the country is only “partly” explained by external factors such as low prices of coal, aluminum and titanium, the main raw materials that Mozambique exports, and the Economist’s analysts also add internal factors such as “bad economic management by the government” and the hidden debts that led to the suspension of foreign aid.

“The next budget is expected to include more austerity measures, which will be a further drag on growth,” says the Economist, going on to warn of the consequences of increasing austerity: “Fewer jobs and higher poverty levels are an inevitable consequence, carrying with them an increased risk of social instability.”

Source: Lusa