Recent Developments & Prospects

Macroeconomic Policy

Fiscal Policy

Monetary Policy

Economic Cooperation, Regional Integration & Trade

Debt Policy

Economic & Political Governance

Private Sector

Financial Sector

Public Sector Management, Institutions & Reform

Natural Resource Management & Environment

Political Context

Social Context & Human Development

Building Human Resources

Poverty Reduction, Social Protection & Labour

Gender Equality

Thematic analysis: Structural transformation and natural resources

Authors: André Almeida Santos, Luca Monge Roffarello, Manuel Filipe

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  • In 2014 real GDP grew by 7.6% and growth is expected to remain strong, at 7.5% and 8.1% in 2015 and 2016, respectively, boosted by the construction, transportation and communications sectors.
  • The legislative and presidential elections of 2014 confirmed Frelimo in power. However Renamo is yet to endorse the election outcome although their MPs have assumed their seats. The implementation of the September 2014 peace agreement will be critical to ensure future political inclusion, internal peace and security.
  • Large projects and infrastructure development related to mining in the centre and north of the country offer a unique opportunity to increase spatial inclusion, further decentralisation, and expand regional integration following the successful Maputo Corridor model.

In 2014, Mozambique’s economy continued to perform strongly with real Gross Domestic Product (GDP) growth of 7.6% and the outlook remains positive. Sustained growth is expected at 7.5% in 2015 and 8.1% in 2016. As in previous years, the main drivers of growth will continue to be public expenditure and Foreign Direct Investment (FDI). The main sectors benefiting are construction, services to enterprises, transport and communications, the financial sector and extractive industries. In the short term, the main challenge is to remain attractive in terms of FDI, while ensuring fiscal and debt sustainability. Consecutive high fiscal deficits, reaching 10.0% of GDP in 2014, have pushed public debt to 56.8% of GDP. A progressive fiscal consolidation for 2015 and 2016 is expected, accommodating also for a decrease in donor budgetary funding.

In spite of lower-than-expected coal production, the extractive sector is an important economic driver. The government completely revised the legal and fiscal framework for the mining and hydrocarbons sector, aimed at increasing revenues and enlarging domestic participation in the sector. A concession contract for a local Liquefied Natural Gas (LNG) plant was negotiated, although the current depression on international oil markets could delay the final investment decision and implementation. Even so, a fifth international tender was launched for the exploration of new oil and gas fields, opening up new prospects for further hydrocarbon discoveries. The lingering low intensity armed conflict between the government and Renamo (Resistência Nacional Moçambicana) ended in a peace agreement in August 2014, paving the way for the peaceful legislative and presidential elections of October. Frelimo (Frente de Libertação de Moçambique) won and its candidate Filipe Nyusi is the new president.

Mozambique has structured its development strategy along Regional Spatial Development Initiatives Programmes (RSDIP) and Growth Poles (GP). These seek to amplify the impact of limited financial resources by optimising infrastructure investments in key areas or along geographic corridors. Typically anchored on large public projects, the RSDIP and GP approaches aim to foster spill over growth by attracting small and medium-sized enterprises up and downstream of largescale investment projects. The Maputo Development Corridor, which provides a model for RSDIP and GP strategies, is among the most well-developed corridors in sub-Saharan Africa and it has been highly successful in generating local economic development. Mozambique has two growth poles and five main development corridors.

Table 1: Macroeconomic indicators

Real GDP growth7.
Real GDP per capita growth4.
CPI inflation4.
Budget balance % GDP-2.9-10-7.4-6.7
Current account balance % GDP-37.2-39.2-45.7-46.8

Source: Data from domestic authorities; estimates (e) and projections (p) based on authors’ calculations.