The World Bank is protecting economic growth in Mozambique of 3.6% in 2016 – about half of the 6.6%rate for 2015 – according to a report published in Maputo.
The document outlines a drop of 17% in foreign direct investment (FDI) in Mozambique and a reduction of 8% in exports and a devaluation of 42% of the metical against the US dollar in the first 10 months of the year.
The weakening of the metical, the report continues, accelerated the pace of inflation to 25% in October, “which makes the increase in the cost of living the most pronounced symptom of the ongoing economic downturn for Mozambicans (…) whose poor population is the most affected by the crisis.”
While recognising that fiscal consolidation and monetary tightening, which was felt in the second half of the year, “are also contributing to slowing growth,” the World Bank points out, however, signs that austerity measures are reducing pressures on the country’s external position, as imports decline and the metical has remained relatively stable since October.
The report also notes that major projects planned for Mozambique “can benefit from a short-term boost,” related to the appreciation in the prices of raw materials and that the prospects for natural gas production in northern Mozambique open up possibilities for growth to recover to 6.6% by 2018.
The World Bank warns, however, that confidence and economic stability depend on the outcome of the request for debt restructuring, requested by the government, and the use that is made of the independent audit. (macauhub)