Mozambique flag Mozambique: Economic outline

Economic Outline

Economic Indicators

Mozambique’s economy recorded average growth rates above 7% of GDP over the period 2000-2016, supported by foreign investment, the rapid growth of the mining sector, and the increase in coal and hydrocarbon reserves. However, the economy has slowed down, impacted by a sovereign debt crisis, the passage of tropical cyclones, and more recently the Covid-19 pandemic and the war in Ukraine. For the first time in thirty years, GDP contracted in 2020, but the country resumed its growth path straight after. The IMF anticipates Mozambique's real GDP growth to sustain its strength, averaging 4.8% over 2024-2025, following an estimated 5.9% in 2023. The robust economic momentum in 2023 stemmed from the increasing output of ENI's Coral South floating LNG project, whereas growth in the non-extractive sector has continued to slow down. However, the outlook for the extractive sector remains robust, as significant LNG projects are expected to resume activities due to sustained improvements in security conditions in the north.

Following fiscal slippages in 2022, authorities have enacted robust corrections to realign fiscal policy. The domestic primary balance was forecasted at 0.8% of GDP in 2023. Fitch anticipates the fiscal deficit to continue narrowing, reaching 2.6% in 2024 and 2.0% in 2025. This improvement is primarily attributed to a further 1.2 percentage point reduction in expenditure on employees' compensation over the period. Concerning the general government debt-to-GDP ratio, the IMF predicts an increase to 92.4% by the end of 2024, before it decreases to 90.2% in 2025, from 89.7% at the end of 2023. This decline is mainly attributed to robust nominal GDP growth over the period, as well as from an out-of-court agreement between Mozambique and creditors from the Proindicus loan, one of the three state-owned enterprises implicated in the "hidden debt scandal". Inflation – estimated at 7.4% in 2023 – is set to marginally ease over the forecast horizon, landing at 6.2% in 2025. The decrease in inflation, coupled with nominal interest rates remaining relatively stable, has led to both policy and market interest rates rising to elevated levels in real terms. This has resulted in very stringent financial conditions. In January 2024, the central bank reduced its key policy rate by 75 basis points to 16.5%, after a 400 basis point increase from January to September 2022, bringing the rate to 17.5%. The authorities are committed to an ambitious reform program focusing on establishing a sovereign wealth fund to transparently manage LNG wealth, mobilizing additional tax revenue, and strengthening public financial management and governance (IMF). Among the main challenges identified by the IMF are adverse climate events, a fragile security situation, governance weaknesses, and debt vulnerabilities.

Unemployment rate was estimated at 3.8% in 2022 according to the World Bank (modeled ILO estimate). However, the informal is still prominent and youth unemployment levels are above 30%. Social inequalities are increasing and a large part of the population lives in poverty (over 63% according to AFDB), especially in rural areas. The northern province of Cabo Delgado, where more than 800,000 people have been displaced due to terrorism, has been particularly affected by increased food insecurity (IMF).

Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 18.4121.3522.9825.2126.67
GDP (Constant Prices, Annual % Change)
GDP per Capita (USD) 558630659703724
General Government Gross Debt (in % of GDP) 99.391.996.994.791.4
Inflation Rate (%)
Current Account (billions USD) -6.38-2.35-8.88-10.82-11.80
Current Account (in % of GDP) -34.7-11.0-38.7-42.9-44.2

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

Monetary Indicators 20162017201820192020
Mozambique Metical (MZN) - Average Annual Exchange Rate For 1 GBP 85.1481.8380.4978.2589.12

Source: World Bank, 2015


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Latest Update: May 2024