Reduction to 2% in 2019

The Bank of Mozambique expects economic growth of about 2% this year, a break compared to the previous year because of natural disasters and uncertainty associated with general elections on 15 October. “This year’s gross domestic product (GDP) will be around 2% (growth), we will be below 3.3% recorded last year,” said Felisberto Navalha, the administrator of Bank of Mozambique, speaking in Maputo at a conference on “Current economic conjuncture and perspectives 2019”.

Navalha said that average inflation may increase slightly due to the negative impact of natural disasters on supply but will end with a one-digit rate. “We will have inflation of one digit, which is reasonable, considering the goal of the Southern African Development Community (SADC), which is 7%,” Navalha said. The representative of the International Monetary Fund (IMF) in Mozambique, Ari Aisen, also estimated a slowdown in growth this year but anticipated recovery in 2020. “There will be a lower growth this year, but there will be a very strong recovery in 2020,” Aisen said.

He said that the IMF has not yet measured the magnitude of climate changes on the GDP.

Aisen also pointed to the increase in prices due to the destruction of agricultural crops caused by Cyclone Idai in the central region but said he feels optimistic for 2020.

Enilde Sarmento from Mozambique’s ministry of economy and finance said that the government is finalising the need to rebuild after the damage caused by natural disasters, noting that it is important to ensure quick funding to allow the resumption of economic activity and production.

“The agriculture sector is the worst-affected, about 14% of the area planned for crops was destroyed, but we also had losses in the sectors of transport and communication and services,” Sarmento said. The government is considering allocating tax incentives and exemptions to the private sector to encourage the mobilisation of resources to enable the recovery of the corporate sector affected by natural disasters, he said. Mozambique was hit by two cyclones in less than two weeks, between March and April – Idai in the central part and Kenneth in the northern.