Country Risk Service Mozambique Updater
The Economist Intelligence Unit, April 2013, Pages: 19
The ruling party, Frente de Libertação de Moçambique (Frelimo), will dominate the political landscape in 2013-17, winning national polls in 2014. The succession to the presidency, currently held by Armando Guebuza, who according to the constitution is serving his final term, will be disputed between his allies and other Frelimo factions. Violence between security forces and Resistência Nacional de Moçambique (Renamo) militia will undermine stability, but outright conflict is unlikely. The fiscal deficit will widen from 4.3% of GDP in 2012 to 7.2% of GDP in the election year of 2014, before narrowing to 6% of GDP in 2017 as royalties from mining and natural resources boost revenue. Economic growth will slow to 7% in 2013, from 7.4% in 2012, undermined by heavy floods. Real GDP growth will rebound to an average of 7.8% a year in 2014-17, driven by the minerals boom and investment in the gas sector. After averaging 2.1% in 2012, inflation will rise to 6.4% in 2013, reflecting monetary loosening and negative price shocks following the floods. It will ease back in 2014, before accelerating again in 2015-17, in line with global fuel prices. The Economist Intelligence Unit expects the current-account deficit to widen in 2013-15, peaking at 20% of GDP in 2015, as foreign investment projects push up imports. It will shrink on the back of growing coal exports in 2016-17, falling to 17.2% of GDP in 2017.
Despite a recent surge in tension with the opposition Renamo party, our view that a return to conflict is unlikely remains unchanged.
Our view that the Banco de Moçambique (the central bank) will seek to curb inflation, which poses a threat to social stability, while also expanding credit to the private sector, remains unchanged.
Country Risk Service Mozambique Updater
Mozambique at a glance: 2013-17
OVERVIEW
Key changes from last month
Political outlook
Economic policy outlook
Economic forecast
Risk assessment
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Rating definitions
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Overall country risk
Central scenario for 2013-17: Political stability
Central scenario for 2013-17: Election watch
Central scenario for 2013-17: International relations
Central scenario for 2013-17: Policy trends
Central scenario for 2013-17: Fiscal policy
Central scenario for 2013-17: Monetary policy
Central scenario for 2013-17: Economic growth
Central scenario for 2013-17: Inflation
Central scenario for 2013-17: Exchange rates
Central scenario for 2013-17: External sector
Key risk indicators
Ratings summary
Quarterly indicators
International assumptions summary
Economic structure
Public finances
Exchange rates, interest rates and prices
Financial sector
Current account
International liquidity
Foreign payment and liquidity indicators
External trade
External financing requirement
External debt stock
External debt service
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