The continued investment across Mozambique’s economy has been contributing to a rising growth outlook, despite challenges from rising inflation and operating costs, Rand Merchant Bank (RMB), the corporate and investment banking arm of FirstRand Bank Limited – of which FNB Mozambique is a part – has revealed.
“We forecast real economic growth of 4.6% in 2023, versus an expected growth rate of 4% in 2022,” projected RMB economist Daniel Kavishe.
According to the Rand Merchant Bank (RMB), the reduction in the price of oil, at a global level, implies a reduction in the upward trend in the cost of imports to Mozambique, “if we do not consider the risk of rising diesel prices – as seen in the second half of 2022”.
Aligning on the same position, Jose Banze, corporate client manager in the logistics sector at FNB Mozambique, added that “in 2023 growth is still expected in the logistics, mining (including gas), agriculture, fishing and hotel sectors (which is in continuous recovery).” “Despite the general economic slowdown, we believe that the demand and recovery of Mozambican gas and coal exports will continue in 2023, due to the war between Russia and Ukraine,” he pointed out.
The main concern for the RMB is the private consumption sector.
Still, the institution’s economist added that rising inflation, rising operating costs and liquidity constraints will remain particularly challenging for most businesses this year. “While a climate of confidence prevails about improving external balances, we reaffirm that higher inflation, persistent security attacks (albeit in an isolated area) and erratic weather patterns are risks that will undermine economic performance,” he argued.
The RMB forecast calls for an average rise in inflation of around 8.7% this year, based on already higher statistics and interest rates that will limit consumer spending throughout the year. Food inflation will be lower relative to 2022, confirming the current more controlled inflation path in 2023 compared to 2022. In addition, increased cash reserves should result, over time, in a lower and more contained inflation profile in order to reduce liquidity in the market.
Rand Merchant Bank expects inflation, over the medium term, to normalize to single digits. However, the risks and uncertainties associated with its projections remain high.
Across the African continent, year-over-year economic growth is expected to be diversified and heavily dependent on fluctuating commodity prices. Geopolitical tensions will also influence several economic indicators in 2023.
