Fast Market Research

Mozambique Business Forecast Report Q2 2014 - New Market Study Published

New Country Reports research report from Business Monitor International is now available from Fast Market Research


Boston, MA -- (SBWIRE) -- 04/14/2014 -- Although a positive sign that progress to end violence in Mozambique can be made, the announcement by opposition party Renamo that it will participate in the October 2014 general election should be treated with caution. Clashes between the government forces and Renamo have continued during early 2014 and this could harden the government's position. Even if Renamo do take part in the vote, we believe that the party will fare poorly.

Strong economic growth and the central bank's tendency to be prudent lead us to believe that Mozambique's benchmark interest rate will be held at 8.25% in 2014. However, we are expecting inflation to remain benign and this could prompt the authorities to loosen policy further, especially if global economic activity presents any negative surprises.

View Full Report Details and Table of Contents

We maintain our view that FDI will cover Mozambique's massive current account deficit, leaving the country's external accounts in a sustainable position. However, risks stem from tensions between the government and opposition party Renamo, and from foreign donor concerns about government policy.

Major Forecast Changes

We have downgraded our 2014 growth forecast from 8.1% to 6.9% owing to signs that political instability is harming private consumption. The relatively modest downgrade, and the fact that we see growth rebounding in 2015, reflects our belief that the negative effect will not be too significant or long-lasting. However, we note that downside risks remain.

The issuance of US$850mn worth of government-backed bonds in late 2013 has led us to increase our forecasts for Mozambique's fiscal deficit, which we now see reaching 10.1% of GDP (including grants) in 2014. We expect the shortfall to narrow in 2015 and to flip into surplus following the onset of gas production, likely in 2020. However, we note that controversy surrounding the bond issuance could pose a threat to donor support and therefore could impact Mozambique's short to medium term fiscal outlook.

Key Risks To Outlook

Mozambique is vulnerable to adverse weather specifically too much or too little rain and this will continue to pose a risk to the agriculturallybased economy.

The security situation poses a major threat to economic growth, the external accounts and government revenue as a significant deterioration would likely lead to reduced foreign investment inflows.

About Fast Market Research
Fast Market Research is a leading distributor of market research and business information. Representing the world's top research publishers and analysts, we provide quick and easy access to the best competitive intelligence available. Our unbiased, expert staff is always available to help you find the right research to fit your requirements and your budget. For more information about these or related research reports, please visit our website at or call us at 1.800.844.8156.

Browse all Country Reports research reports at Fast Market Research

You may also be interested in these related reports:

- Chile Business Forecast Report Q2 2014
- Brazil Business Forecast Report Q2 2014
- Hungary Business Forecast Report Q2 2014
- Croatia Business Forecast Report Q2 2014
- Trinidad & Tobago Business Forecast Report Q2 2014
- Canada Business Forecast Report Q2 2014
- Russia Business Forecast Report Q2 2014
- Albania Business Forecast Report Q2 2014
- Lithuania Business Forecast Report Q2 2014
- United States Business Forecast Report Q2 2014