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Continuity mistake: During the song "Lay All Your Love on Me" on the beach, when Sophie lies back and then Sky is on top of her, in this closeup we see Sophie's wearing something else over her swimsuit. It's visible below her waist and as she lifts her right leg. (00:45:00)
Answer: Sophie finds Donna's diary from 1979, being the year Sophie was conceived meaning she was born in 1980 (as the diary entries are from July/August). So the movie is set in 2000.