GROWTH OUTLOOK

The Executive foresees GDP to grow at a rate of 7.5% in 2015, followed by a deceleration to 7.0% in 2016, according to its 2016 State Budget proposal. The economic activity is expected to benefit from increased productivity in the agricultural sector, coal production (which will benefit from coal shipments from Moatize, through the new railway and to the new coal deck in Nacala-a-Velha, as well as the re-opening of the Sena train path, currently undergoing renovations), as well as the benefits from the new base of logistics located in Pemba.
The IMF has lowered its GDP growth forecast for 2015, arguing that while the economic activity remained solid, new challenges arouse that may have hindered the rate of growth. Even so, the IMF forecasts a growth rate of 6.3% for 2015, for which the main contributors were the transportation, communication and services sectors. The IMF believes that, while the medium-term outlook remains positive, on the short-term, Mozambique faces serious external challenges related to the lower commodity prices in practice, the lower growth rates reported by its main trade partners and the delays in investments related to liquefied natural gas (LNG) project. For 2016, the IMF also lowered its GDP growth forecast from 8.2% to 6.5%, also expecting a medium-term acceleration towards figures between 7.5% and 8%, due to investments in natural gas projects in the Rovuma basin as well as increased coal production. Nevertheless, according to the Standard Bank, the economic growth in 2016 may drop below 6%, in case of delays in any of these projects. Despite the challenges Mozambique faces, the international rating agencies continue to expect favourable growth rates in 2016. Moody’s sees the country’s growth outlook positive for the medium term, driven by the country’s.
The substantial amount of natural resources, while nevertheless noting the small size of the Mozambican economy, its lack of diversification (agriculture continues to represent a third of the GDP and employ 80% of the workforce), infrastructure bottlenecks and low income per capita. As such, Moody’s expects the economy to grow 6.7% in 2015, followed by a stronger 7.5% in the current year.
The rating agency Fitch expects an average growth rate of 6.6% between 2015 and 2017, stating that the medium-term economic outlook remains positive, supported by strong investment growth, expansive workforce and the ongoing development of its ample natural gas resources. According to the agency, weak performance in the mining sector is partially offset by strong growth in agriculture, transportation, utilities and services, which are likely to continue to benefit from macroeconomic stability. Standard & Poor’s expects a growth rate of 7.0% in 2015, followed by a stronger 7.5% reading in 2016, noting, as did the other agencies, that the ongoing investments in projects related to the mining sector are likely to spur economic growth over the following years.

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