Written by Joaquim Tobias Dai
Our emotions, experiences, and expectations, resemble the seasons. They are all important, but the effect they have on us is disparate, in its own way. Some are joyful and some not so joyful.
During the last year, we have been obsessed with deconfinement and for various reasons. Deconfinement is synonymous with victory over the disease. It means a marked reduction in the levels of contagion and, consequently, the return of business and a new hope for prosperity, like spring. A new hope, but also a feeling of turning the page on a hard winter that is behind us. But again and again, after the spring, winter returned and with it the depression. Only after the third wave and the massive arrival of the vaccines to the world, we embraced the new normal and went back to trying to race against time and look for alternatives to reduce the costs of the pandemic or save the businesses that can still be saved.
The year 2020 reflected the corollary of events that, since the year 2015, have motivated a slowdown in the pace of economic growth in Mozambique, which until then was growing at averages of 6%, constantly above the pace of growth in Southern Africa.
There were several reasons for this slowdown: from the impact of the global economic crisis, the currency crisis that began in late 2014, the trail of destruction left by natural disasters such as cyclones Idai, Kenneth and Eloise. Also important are the budget constraints resulting from the suspension of State Budget funding by cooperation partners (as a result of the undeclared debt crisis), as well as the consequences of the impact of the attacks in the central region and terrorism in Cabo Delgado province. Finally, the COVID-19 pandemic inevitably led to an economic slowdown with a strong impact, particularly in the construction, tourism, and transport sectors, and a decrease in demand for raw materials in international trade.
Finally, the pandemic of COVID-19 inevitably led to an economic slowdown with strong impact,...
The sum of these events has resulted in an economic contraction of around 0.5% in 2020, according to data from the African Development Bank, the first negative growth in the last 28 years in Mozambique, following growth of 2.2% in 2019.
O International Monetary Fund, in your World Economic Outlook (WEO)October 2020, as well as African Economic Outlook, estimate for Mozambique a 2.1% growth in 2021 and more encouraging growth prospects for the subsequent years, projecting double-digit growths for the years 2024 and 2025.
For 2021, according to the WEO, inflation was estimated to increase by 5.6% (5.3% in the AfDB - African Development Bank estimates), given the combination of several factors, namely, the 21% depreciation of the metical against the US dollar and the increase in domestic demand during the recovery period.
The negative picture motivated by terrorism in the northern province of Cabo Delgado has a major impact on the Mozambican economy, which the government estimates at 300 million US dollars as the amount needed to operationalize the Reconstruction Action Plan for Cabo Delgado. But the total losses are still difficult to measure - mainly on the country's international reputation with direct consequences on the level of FDI attraction.
The negative picture motivated by terrorism in the northern province of Cabo Delgado has an important impact on the Mozambican economy,...
The Coral South FLNG project, located in Area 4, led by Italian oil company Eni, announced on June 1, 2017 its Final Investment Decision, budgeted at US$7 billion. For its part, in August 2019 Mozambique saw the Final Investment Decision of the Golfinho/Atum Project, to be implemented in Area 1, led by Total, and budgeted at $23 billion. All these plans now need new calculations and new execution planning, believing that the interest of investors remains.
Total announces that it maintains its strong intention to continue its project in Mozambique, conditioned by security reasons in the area. Similarly, the French flag carrier Air France, which had also postponed without date the start of flights to Mozambique, has already announced a postponement in its operation to Mozambique, but not cancellation, thus indicating the degree of confidence in the resumption of the project and, with it, the hope for the return of these projects that Mozambique is eagerly awaiting.
The shocks that the country had to deal with this past year should serve as motivation for more creativity in the search for solutions...
CTA - Confederation of Business Associations of Mozambique, estimates losses for the national business sector between 234 and 375 million US dollars, highlighting, as in most countries, the tourism sector as the most affected. The outlook for unemployment rates was also revised, with an estimated average of 17.5%, with disparate values among the various cities, even taking into account the limitations in the scaling up of this data, given the strong prevalence of informal and subsistence activities.
The shocks that the country has had to deal with this past year should serve as motivation for greater creativity in the search for permanent solutions to the country's recurrent problems. But as we say around here, hope is the last to die, and we are sure that the shocks of the last two years will make us stronger and better prepared to face the future with optimism.