Mozambique Country Risk Report Q3 2018
Economic growth will accelerate in Mozambique over 2018 owing to low inflation and currency stability. However, growth will remain far below its 2000-2015 trend due to a continued absence of foreign budgetary assistance and weaker tailwinds from the mining sector.
A deal between Mozambique's government and the main opposi-tion party to alter the way that provincial governors are elected will go a long way towards a lasting peace deal between the two sides, though progress towards peace depends heavily on continued negotiations following the death of the opposition's leader, Afonso Dhlakama, in May 2018. We also note that a concomitant change to the means by which municipal mayors are elected, coupled with ongoing economic weakness, will fuel popular frustrations and risks of resultant instability will remain elevated.
Deteriorating terms of trade and an ongoing donor boycott will weigh on Mozambique's current account over the coming quarters. Although we continue to believe that inflows of foreign investment will prevent a balance of payments crisis, the deteriorating outlook for the current account means that the external accounts will remain susceptible to external shocks.
Mozambican inflation will rise gradually over the second half of 2018, as currency weakness against the South African rand and diminishing disinflation from food prices push headline growth higher. Against this backdrop, we expect the monetary authorities' aggressive easing cycle over recent quarters to be paused in H2 as inflation begins to rise.
Learn how to effectively navigate the market research process to help guide your organization on the journey to success.Download eBook