The relationship between the Prime Rate and the sectors of the Mozambican economy
Keywords:
Prime Rate, Economic Sectors, MIMO, MozambiqueAbstract
The Prime Rate, or basic interest rate, is a fundamental indicator for understanding the financial dynamics of many economies around the world. In Mozambique, this rate plays a pivotal role in determining the cost of credit for consumers and businesses, influencing investment, consumption, and even saving decisions. The sectors of the Mozambican economy, from agriculture to services, are directly or indirectly impacted by fluctuations in the Prime Rate. A detailed analysis shows that the industrial segment is notably affected by both the Prime Rate and the MIMO. More specifically, an increase in the Prime Rate or MIMO leads to a significant reduction in the target metric of this segment. These two metrics, together, account for more than half of the changes in the industrial sector. Turning to the commercial sector, we see links between the Prime Rate, MIMO, and the metric in focus, but they are not statistically significant. Fluctuations in the Prime Rate and MIMO account for a smaller portion of the variation in this sector, not exceeding twenty percent. Regarding the services segment, both the Prime Rate and MIMO have a limited impact. Changes related to the Prime Rate, though present, are not significant from a statistical standpoint. As for the MIMO, its effect in this sector is almost negligible, representing only a small fraction of the observed changes.
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