Covid-19 puts signs of economic recovery in Mozambique at risk

3 April 2020

The Covid-19 pandemic is expected to put the signs of economic recovery in Mozambique seen since the beginning of the year at risk, said Eaglestone Securities in its report on Mozambique for April 2020.

“Economic activity was recovering from the effects of cyclones Idai and Kenneth, and recent forecasts reporting economic growth of 5.0% in 2020, supported by reconstruction efforts and the progress made in the natural gas projects, as well as the gradual recovery of private consumption and investment,” said the report.

The document noted that the pandemic of the new coronavirus, alongside the risks and uncertainties regarding the economic development of the country, put all the indicators into question.

“The current pandemic will put pressure on the balance of payments due to the sharp drop in commodity prices, which may even lead to postponements in the natural gas exploration projects, leading to an inversion of the economic recovery trajectory.”

The Eaglestone Securities analysts said that the government of Mozambique had reduced it economic growth forecast to between 2.2%, a worst case scenario, and 3.8% in the best case, which compares with a previous forecast of 4.8%.

The downward review was explained by the sharp contraction in economic activity around the world, which will depend on the evolution of the pandemic, will affect all sectors of the economy, from the extractive industry to agriculture.

As a result of all these factors, Eaglestone Securities estimates that the Mozambican economy will post growth of 2.0% this year and rise to 4.5% in 2021. (macauhub)