2013-01-01 01:19:53 - Mozambique Business Forecast Report Q4 2012 - a new country guide report on companiesandmarkets.com
Despite slower growth in the first quarter of 2012, we maintain our view that the Mozambican economy will expand by a robust 7.5% in 2012 and that growth will then head towards double digits in the years thereafter as investment flows into the country´s natural resource extraction sector. Despite a hold decision at its August meeting, we believe that the Mozambican monetary policy committee will continue easing policy and will enact a further 150 basis points of rate cuts in 2012 taking the policy rate to 10.00% by year-end. We believe that the easing cycle will come to an end in 2013 but that the authorities are not likely to begin tightening too hastily, instead keeping rates at historically low
levels in the year.
Key Risks To Outlook
A failure to address deficient infrastructure is the most pressing risk to our upbeat view on the Mozambican economy. Transport infrastructure in particular is currently inadequate to get Mozambique´s natural riches to international markets. Failure to address this would negatively impact our expectation that exports will be a major driver of growth over the coming years. Insufficient infrastructure investment would also have an impact on Mozambique´s external accounts and risks prolonging high and ultimately unsustainable current account deficits. The weather is also a major risk. Much of southern and central Mozambique is prone to flooding, which can have a devastating impact on the economy. The country also remains a net food importer and therefore remains susceptible to regional weather and food supply shocks.
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