Fast Market Research recommends "Mozambique Business Forecast Report Q1 2013" from Business Monitor International, now available
Boston, MA -- (SBWIRE) -- 01/11/2013 -- Core Views
The outlook for the Mozambican economy continues to look bright and we are forecasting real GDP growth of 7.6% in 2013 and 8.1% in 2014. Investment into the country's natural resource sectors will be the major driver although infrastructure and consumption are also likely to perform well.
However, we note that the country's fiscal accounts reflect some of the challenges it faces. Broadly, the difficulty for the authorities will be to ensure that the country's population benefits from strong economic growth, which will raise pressures to increase spending and taxes. This will need to be balanced against continuing to improve the business environment to ensure that much-needed foreign investment continues to flow in.
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The current account shortfall will remain pronounced over coming years even in spite of strong export growth as demand for imported goods and services needed to facilitate investment will negate the positive effect. However, given that major investment projects will be financed by foreigners, we see little risk of a balance of payments crisis.
Major Forecast Changes
No major forecast changes.
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.
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.
Rising money supply growth and weakness in the currency could be a precursor to a spike in inflation. At this stage, we believe that authorities have the power to forestall such an outcome but we will be watching monetary and currency developments closely.
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