World Bank forecasts 4.6 percent growth for Mozambique in 2017
Mozambique's economy is likely to grow by 4.6 percent this year on the back of the expected recovering of coal, aluminium and gas prices and improved farm output, the World Bank said on Tuesday.
In a report on the Mozambican economy, the bank said strengthening prices for coal, aluminium and gas, a post El Niño recovery in agriculture and progress in the country’s peace talks “could steer growth to 4.6 percent in 2017 and towards 7 percent by the end of the decade".
The Mozambican government said the southern African nation's gross domestic product expanded by 3.3 percent in 2016.
The World Bank report, that sees Mozambique becoming increasingly “a two-speed economy” as extractives and mega projects drove growth while other sectors lagged behind, said trends in early 2017 showed signs of improvement in the southern African economy as first quarter growth picked up and the currency stabilized.
The report however warned that economic conditions remained challenging as growth “is well below the levels seen in recent years and inflation remains very high at 18 percent.”
It also noted that Mozambique’s reference lending rate is now among the highest in sub-Saharan Africa, and average commercial bank lending rates – that are in the region of 30 percent – are prohibitively high for much of the private sector.
Hence, more needs to be done to help Mozambique’s economy recover, especially the small and medium enterprises.