Pandemic should cut Mozambique’s growth to 2% – Eaglestone

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Pandemic should cut Mozambique’s growth to 2% – Eaglestone

2:40 CAT | 06 Apr 2020

The chief economist at the consultancy Eaglestone thinks that the Mozambican economy will register economic growth of only 2% this year as a result of the drop-off of raw materials exports amidst the uncertainty as to the evolution of the Covid-19 pandemic.

“We are assuming a growth of 2% for this year, slightly below the most pessimistic forecast of the government recently announced which points to 2.2%, while the most optimistic estimate points to a 3.8% rise in GDP, both showing a significant reduction compared to the 4.8% initially forecast by the Government,” analyst Tiago Dionísio said.

Speaking to Lusa regarding the worsening economic situation in Africa following the imbalance caused by falling raw material prices and the spread of the Covid-19 pandemic, Dionísio stressed the importance of reaching a medium-term agreement with the International Monetary Fund (IMF) after the pandemic is under control.

“After the issue of this pandemic is overcome, the most pressing issue for Mozambique is to close a new medium-term agreement with the IMF. This would allow the country to improve its credibility, particularly with international investors, and help in the resumption of the external financial assistance the country needs for its development,” he suggested.

Last week, Eaglestone sent customers a report on Mozambique, in which it analysed the risks facing the country’s economy.

“The latest events related to Covid-19 brought risks and uncertainties to the country’s economic prospects, which should bring additional pressure on the balance of payments due to the recent sharp drop in the price of raw materials and even a delay the implementation of gas projects, thus penalising the country’s recovery path,” the communique outlined.

Economic activity, Dionísio concluded, was recovering from the impact of cyclones Idai and Kenneth, which devastated parts of the country last year, with an estimated growth of close to 5% this year, “thanks to the country’s reconstruction efforts and the strides in natural gas projects”.

The coronavirus responsible for the Covid-19 pandemic had by Sunday infected around 1.2 million people worldwide, of whom more than 63,000 have died. Of those infected, about 220,000 are considered to have fully recovered.

The outbreak has spread worldwide since emerging in China in December, prompting the World Health Organisation (WHO) to declare a ‘pandemic’.

Europe, with more than 627,0000 infected and more than 46,000 dead, has the highest number of cases, and Italy the most fatalities, with 15,362 deaths among its 124,632 confirmed cases as of Sunday.

Spain has the second highest number of deaths, registering 11,744, among 124,736 confirmed cases of infection to date.

The United States, with 8,162 deaths, currently has the most infections (300,915).

Source: Lusa