Mozambique’s International Flows Exceed Expectations as Country Grapples with Slow Economic Growth Projections

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Mozambique’s international flows have exceeded expectations, a new analysis by DHL, the world’s leading brand in the logistics industry, has revealed. DHL said this is positive news because deeper global connectedness can help accelerate economic growth for the region.

In 2018, trade between Mozambique and China reached $2.515 billion, which is an increase of over 35% when compared to 2017, the Chinese Customs Service revealed this February. Figures published by China Customs Service show that exports from Mozambique to China grew by 23% to $651 million, while imports increased by 40% to $1.86 billion in 2018. This made Mozambique the fourth largest trading partner that China has in the Lusophone world after Brazil, Angola, and Portugal.

In 2019, Mozambique has also vowed to increase trade with regional counterparts such as Kenya and plans to boost partnerships with other international players such as India.

DHL released the fifth edition of its Global Connectedness Index (GCI) this month. The index is a detailed analysis of globalization, measured by international flows of trade, capital, information and people. The new GCI report represents the first comprehensive assessment of developments in globalization across 169 countries and territories since the Brexit referendum in the United Kingdom and the 2016 presidential election in the United States.

Mozambique, which was highlighted in the Index, is in desperate need of increased economic activity. The country’s economy is expected to remain unchanged in 2019, with Gross Domestic Product (GDP) growth falling by 10 basis points compared with 2018 to 3.4%, according to the Economist Intelligence Unit (EIU), a research group that provides country, risk and industry analysis, across 200 countries worldwide.

The latest report on the country noted that difficulties in access to credit by agricultural producers will continue to hamper the sector’s growth and the fall in the international prices of coal will put a brake on new investments in mining. Mozambique is a player in the global coal industry.

Meanwhile, DHL has found that in spite of growing anti-globalization tensions in many countries, connectedness reached an all-time high in 2017, as the flows of trade, capital, information and people across national borders all intensified significantly for the first time since 2007. Strong economic growth boosted international flows while key policy changes such as US tariff increases had not yet been implemented.

From the Index, it emerged that the world’s top five most globally connected countries in 2017 were the Netherlands, Singapore, Switzerland, Belgium and the United Arab Emirates. Eight of the top 10 most connected countries are located in Europe. North America, the leader in capital and information flows, ranked second among world regions, followed by the Middle East and North Africa in third place.

In Sub Saharan Africa, the highest-ranking country was Mauritius, which featured in 40th position, while South Africa was named the highest ranking country on the African continent itself, with an overall ranking of 56th place.

The Index named Mozambique one of the five countries where international flows exceeded expectations the most.

DHL stated that one cause for optimism regarding further growth potential for Sub Saharan Africa, is the African Continental Free Trade Agreement (AfCFTA), which was signed by 49 countries in March 2018.

According to a study by the UN Economic Commission for Africa, full implementation of the AfCFTA could double intra-African trade and boost the whole continent’s global connectedness.

“As the world continues to globalize, there are still many opportunities for intercontinental and intraregional trade, particularly for emerging economies in Sub Saharan Africa,” said Hennie Heymans, CEO of DHL ExpressSub Saharan Africa.

“Globalization is a key driver for growth and fiscal security, which is evident in countries that have embraced it. We are confident about continued further growth in the region with new trade agreements coming into effect, to support regional collaboration,” Heymans concluded.

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