Financial ratings agency Standard & Poor’s said today that extreme weather events in Mozambique will delay economic recovery and increase risks over the long-term outlook
“Extreme and recurring climate events are likely to delay economic recovery in Mozambique and exacerbate the risks of long-term growth prospects,” reads a comment sent to Lusa, in which it is written that S&P expects 1% growth in 2020 and 5.5% this year in the country.
“Climate risks and the effects of the covid-19 pandemic have weakened economic performance in the last two years; the effects of the pandemic and cyclone Eloise, as well as the intensification of the insurgency in Cabo Delgado province, will potentially weaken economic recovery this year and delay the development of natural gas projects,” writes the rating agency’s analysts.
“Our view of Mozambique’s financial, institutional and economic profile reflects the adverse influence of environmental, social and governance factors,” the analysts point out, specifying that “from natural disasters to security threats in the north, which pose risks to social cohesion and macroeconomic stability, high indebtedness, and low level of development, all these are long-term constraints on credit quality.
In 2019, Mozambique was affected by two cyclones, Idai and Kenneth, “the biggest cyclone ever recorded in Africa,” according to S&P, which puts the financial impact at US$3.2 billion (2.6 billion euros), citing World Bank figures, and recalls the 2.5 million people affected.
“This is significant in a country with low levels of wealth and very low penetration of the insurance industry, at only 1.5% of GDP,” the analysts point out.
S&P’s observations come days after the Global Climate Risk Index, compiled by the non-governmental organisation (NGO) GermanWatch, placed Mozambique at the top of the list of countries most vulnerable to climate change, after it was affected in 2019 (last year analysed) by two of the biggest cyclones that have hit the country (Idai and Kenneth), which killed some 700 people.
After that, other storms hit the country, including cyclone Eloise, at the end of January, causing at least nine deaths and 290,000 people affected, including 18,000 displaced.
