Mozambique’s economy expected to grow

Economic growth in Mozambique in 2016 should be around 3.6% according to latest analysis by the Economist Intelligence Unit (EIU), half the figure posted over the last decade, due to lower public spending, weak exports and disturbances in agricultural production .

From next year, the EIU predicts an acceleration to an average growth of 5.1% between 2017 and 2020, driven by macroeconomic stabilisation and recovery of investor confidence.

The EIU says that the recovery will be directly linked to increased coal production and its prices in international markets between 2017 and 2018 and improved agricultural production from 2017, however, with few results, due to a lack of agricultural productivity and low prices on export products.

In the economic analysis of the situation in Mozambique dated mid-September, the EIU says a drop in investment is likely, as a result of “high inflation, currency volatility and growing political risks.”

Mozambique is experiencing a period of multiple crises, marked by cooling economic growth, strong devaluation of the metical against the dollar, lowering of commodity prices and exports, a sharp rise in inflation and a drop in foreign investment and foreign aid as a result of undisclosed loans taken on by the state that have led State debt to rise sharply.

As a result of the country’s internal situation investment intentions in Mozambique fell 48% in the first half of 2016 compared to the same period of last year. (macauhub/MZ)