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Mozambique’s GDP Heavily Hit by Natural Disasters

Mozambique’s GDP Heavily Hit by Natural Disasters

In the last 20 years, natural disasters have cost Mozambique 1.3% of its gross domestic product (GDP), according to a report by the state news agency AIM which specifies that the most devastating natural shocks for the economy there have been cyclones, floods and severe droughts, as well as the most recent health crisis, the Covid-19 pandemic.

“Mozambique is one of the countries most affected by natural disasters which, according to the most recent estimates, have caused losses estimated at 1.3% of GDP in the last 20 years”, reads the report, which quotes the words spoken by the deputy minister of Economy and Finance Carla Louveira during an economic forum on the prospects for investment and financing of the economy.

The government estimates that in 2020 alone, Covid-19 negatively affected economic growth by 3.6%, reducing the employment rate by 1.9%, the report reads.

The armed insurgency in the Cabo Delgado province in the north of the country, which exerted a heavy tax burden, also contributed to the contraction of the economy during the reporting period. According to the report, the insurgency ended up delaying the normal flow of liquefied natural gas projects and affected the trading, hospitality and mining sectors.

Despite the adversity, the government expects an expansion of public investment for the next few years, influenced by the easing of restrictions on external financing with a new program from the International Monetary Fund.

Since 2022, there has been a notable positive evolution, with the country recording a real GDP growth rate of 4.1%, above the average level for the Southern African Development Community (SADC) region , which was 3.8%, reflecting the momentum and recovery of the economy, Louveira said.

The deputy minister stated that the economic prospects for the medium term are positive, with an average growth rate of around 6.4% per year, thanks to the consolidation of the economic recovery strongly influenced by the implementation of gas projects.

AIM

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