EIU forecasts 4.15 pct inflation in Mozambique in 2014

22 May 2014

The Economist Intelligence Unit (EIU) has revised its forecast for average annual inflation in Mozambique from 4 percent to 4.5 percent for 2014, and kept its projection for the country’s economic growth unchanged at 7.3 percent.

In its macroeconomic report on Mozambique for May, to which Macauhub had access, the EIU changed its projection based on a “sudden rise” in the price of food over the last two months.

According to the EIU, the rise in food prices was due to a rise in prices in South Africa and the rise in the value of the rand against Mozambique’s metical.

“As a result we now expect average inflation to be 4.5 percent,” said the EIU report, which despite changing its projection has maintained its forecast for inflation at 4.7 percent for next year and 4.3 percent for 2018.

Overall the EIU’s latest analysis of Mozambique has no significant changes compared to its April analysis, particularly in the context of development of the Mozambican economy, which the EIU expects to post growth of 7.3 percent in 2014, 7.66 percent in 2015 and 7.8 percent between 2016 and 2018.

However, the EIU expects the country’ current account deficit to total 37.7 percent in 2014 and explains that this is due to expenses related to importing machinery for the extracting natural resources.

For 2018 the EIU projects that Mozambique’s balance of trade will post a deficit of 31.1 percent, which will be an improvement of 0.3 percentage points compared to its previous projection (31.4 percent). (macauhub/MZ)