[2019-01-22] Mozambique’s economic growth in 2019 practically unchanged compared to 2018 – EIU

Source: Macauhub

Mozambique’s economy is expected to remain unchanged in 2019, with Gross Domestic Product (GDP) growth falling by 10 basis points compared with 2018 to 3.4%, according to the Economist Intelligence Unit (EIU).

The latest report on the country noted that the difficulties in access to credit by agricultural producers will continue to hamper the sector’s growth and the fall in the international prices of coal will put a brake on new investments in mining.

The EIU also said the country’s financial problems were also hampering development as well as the high amount of late payments by the government which “continue to weigh heavily on the banking sector and undermine investor confidence.”

In the long term, particularly with the start of the exploration of natural gas deposits in the Rovuma basin, the economy will tend to grow faster, with a forecast of 4.5% in the 2020/2022 period.

The report recalled the oversupply in the world natural gas market and that the materials for the construction of the gas extraction and processing facilities will have to almost entirely be imported and therefore the impact on the country’s economy will be limited.

However, the start of gas extraction in the Coral Sul field, projected for 2023, is expected to drive economic growth that year to 7.5%, although the influence of this project on the rest of the economy, through the provision of services, should be very limited.

Among the main economic indicators, inflation is expected to be between 6.1% this year and 6.7% in 2023, and the budget balance is expected to increase from minus 8.0% in 2018 to minus 8.3% this year, an election period, until it reaches 2023 with a value of minus 4.1%.