Fitch Solutions forecasts the Mozambican economy to accelerate below the 5.5% average of the last decade, but recovering from last year's 1.3% contraction.

The consulting firm Fitch Solutions forecasts the Mozambican economy to accelerate to 2.8% growth this year, well below the 5.5% average of the last decade, but recovering from last year's 1.3% contraction.

"We anticipate that Mozambique's GDP will grow by 2.8% this year, and that the government will not implement such harsh confinement measures as those that were applied in the second quarter," reads a commentary on data released by the National Institute of Statistics in late August, which show growth of 2% in the second quarter of this year, which follows an expansion of only 0.1% in the first three months of the year, both year-on-year.

In the commentary, sent to clients of this consulting firm owned by the same owners of Fitch Ratings, we read that due to the easing of the confinement measures, "labor market conditions will continue to improve gradually, strengthening households' disposable income and consumer confidence, leading to a moderate recovery in private consumption."

Public spending, add the analysts in the note to which Lusa had access, will also increase, namely in the fight against insecurity in Cabo Delgado and in the purchase of vaccines against the covid-19 pandemic, which will boost economic activity.

In addition to public spending, the recovery in Mozambique's main exports also supports the forecast of economic recovery this year.

"Domestic coal production is expected to recover from a contraction of 16.9% in 2020 to growth of 10.6% as major mines resume operations, and aluminum prices are also expected to see a strong rise, from $1731 per ton to $2300 this year, supporting a robust recovery in exports this year," the analysts point out.

On Monday, the National Statistics Institute reported that GDP grew by 1.97% in the second quarter of this year compared to the same period in 2020.

It is the second consecutive quarter of growth, following a 0.12% rise in the first quarter of 2021, signaling a recovery from the crisis caused by the covid-19 pandemic.

"The performance of economic activity in Q2 2021 is primarily attributed to the tertiary sector, which grew by 2.82%, most notably the Hotel and Restaurant industry with a change of 4.03%," INE notes.

The State Budget for 2021 foresees an economy growth of 2.1%, but the document was approved in late 2020, three months before the indefinite suspension of TotalEnergies' gas project in the north of the country due to insecurity in Cabo Delgado province.

Lusa Agency