Flood damage to affect Mozambique’s GDP forecast: Moody’s

The international ratings agency Moody’s on Tuesday predicted that Mozambique’s 2015 gross domestic product (GDP) growth could be cut by between 0.2 percent and 0.5 percent due to the heavy rains and flooding that have hit the centre and north of the country.

The U.K.-based agency said in a statement on Tuesday: “[The] continued rainfall has caused severe damage to the Zambezi and Licungo River basin[s] regions’ infrastructure, especially in Zambézia province to the north where almost 20 percent of the country’s population resides”.

Moody’s added that the damage would increase pressure on the Government’s fiscal position, exacerbating the upward debt trajectory experienced by the country in recent years.

“The Government’s debt levels will continue rising: since 2011, general Government debt has risen by more than a third and will now likely exceed our forecast of 58.3 percent of GDP this year as a result of the higher budget deficit and lower GDP growth figure,” said the ratings agency.

It added: “At this level, Mozambique’s general Government indebtedness is high relative to many regional and rating peers.”

Floods in Mozambique have left at least 170 people dead and more than 160,000 others homeless. Damage to roads and bridges has cut access by land to almost 70 percent of Zambézia province.

Moody’s warns that further storms are forecast with floodwaters unlikely to subside until the end of the rainy season in March. It expects that the economy will slow down as the agriculture sector accounts for about 30 percent of GDP and 80 percent of the labour force.