IMF lowers growth forecast for Mozambique’s economy to 7 pct

7 August 2015

The International Monetary Fund (IMF) projects that the Mozambican economy may grow up to 7 percent in 2015, a downward revision of half a percentage point compared with previous forecasts, according to a report published Tuesday in Washington.

One of the main reasons for the downward review is the effect of floods earlier this year, although the negative impact of bad weather on agricultural production was less severe than anticipated.

The IMF said that despite the considerable fiscal adjustment, growth was expected to remain strong, with the expansion of the economy bolstered by dynamism in the areas of transport, communications and services.

The IMF recommended fiscal adjustment, greater flexibility of the exchange rate and robust liquidity management to preserve macroeconomic stability and for the country to continue to attract foreign investment.

The aim is to support growth in the oil and gas sectors in which investments of up to US$100 billion are expected over the next decade.

According to the IMF, it expects a slowdown in expansion of mining production due to lower international prices of raw materials, and in the mid-term economic growth should remain between 7.5 percent and 8 percent, supported by natural gas.

Despite the depreciation of the metical in the first quarter of this year, the IMF expects a moderate acceleration of inflation due to rapid recovery from the floods, low international prices and more rigorous financial policies throughout the year. (macauhub/MZ)