The consultancy Capital Economics foresees 3.0% growth for the Mozambican economy this year, but warns of the risk to investment due to instability in the north of the country, in particular due to the suspension of the liquefied natural gas exploration project.

"In Mozambique, the declaration of 'force majeure' on a major LNG [liquefied natural gas] project following repeated attacks by insurgents is adding new headwinds to an already sluggish recovery. The abandonment of the project would seriously damage the country's growth prospects and raise real concerns about public debt," the analysts wrote in a note consulted by Lusa on Sunday.

In the paper, the analysts note that "the desire for investment in Mozambique is in jeopardy as insurgent attacks continue in the north of the country."

In the document, Capital Economics also presents its forecasts, estimating for this year a 3.0% growth in Mozambique's GDP, which should grow by 4.0% in 2022 and 4.5% in 2023.

As for inflation, the consumer price index is expected to grow 5.5% this year, 5.8% next year, and also 5.8% next year, according to the London-based consultancy's forecasts.

French oil company Total has a 26.5% share in the liquefied natural gas project under development in the north of the country, whose first production and export was scheduled for 2024 but has been delayed by at least a year following the oil company's declaration of 'force majeure'.

On April 26, Total eventually made a declaration of 'force majeure,' i.e., assuming itself "unable to fulfill its obligations as a result of the severe deterioration of the security situation in Cabo Delgado, a matter that is completely beyond Total's control."

Of the $20 billion investment - the largest private investment in Africa - it was expected to channel 12.5% to local companies during construction.

Lusa Agency