Standard Bank has lowered its growth forecast for Mozambique’s economy in 2016 from 5.6 percent to 2 percent and predicts that public debt will reach 100 percent of gross domestic product (GDP) by December, according to the June economic bulletin.
In the report, signed by chief economist Fáusio Mussa, the bank also forecasts that the prices of goods will continue to increase, with average inflation of between 17 percent and 19 percent in 2016 based on current assumptions.
Standard Bank says that annual inflation rose by 98 basis points to 18.3 percent and the average rate rose 142 basis points to 8.6 percent, reflecting the depreciation of the metical (69 percent against the dollar in May) and the bad performance of the agricultural sector.
“These figures reflect strong food inflation of 31.9 percent year on year in May, representing a record high, and non-food inflation of 5.8 percent,” says the document.
The report highlights the difficult situation that Mozambique is experiencing, including a fall in the supply of foreign currency, foreign direct investment slowdown and reduction in export earnings due to falling commodity prices. (macauhub/MZ)