Mozambique is rich in natural resources and was one of the fastest growing economies on the African continent in the 2010s. Before the fall in commodity prices and a major corruption scandal in 2016, strong economic growth and assistance from international organizations had only a moderate impact on poverty reduction and human capital development. Mozambique remains one of the poorest countries in the world, with more than half of the country's population living below the poverty line. About 2/3 of the population (22 million people) continue to live and work in rural areas.

In 2020, Mozambique experienced its first economic downturn since 1993, amounting to 1.2%, which was caused primarily by the COVID-19 pandemic and related disruptions in supply chains. In addition, the conflict in the north of the country had a significant impact on economic activity, especially its escalation in the province of Cabo Delgado in 2020. This led to a rapid deterioration of the humanitarian situation in the northern provinces of the country, which were among the poorest before the conflict.

In 2021, Mozambique's GDP grew by 2.3% compared to 2020, helped by the recovery of agriculture and mining, as well as increased exports and government spending. Nevertheless, the continuing instability in Cabo Delgado had a significant deterrent effect on the economy, which slowed down the expected results from investments in the liquefied natural gas (LNG) sector.

Mozambique's economy continued to show strong growth, increasing by 4.1% in 2022. The country's economic growth in 2022 was driven by high indicators in the transport, agricultural and mining industries.

According to the reports of the IMF and the World Bank, growth is expected to accelerate during 2023-2028 due to the continued recovery of the service sector, increased LNG production due to the implementation of large-scale projects, high commodity prices, as well as increased external financing from the IMF.

Plans to resume LNG production in Cabo Delgado allow us to forecast a significant increase in Mozambique's GDP growth rate to 15.5% by 2027. It is expected that this will happen in 2026-2027, subject to the restoration of stability in the region.

Frequent natural disasters, growing tensions in the northern regions of the country, failures in supply chains in 2021-2022 led to a sharp increase in inflationary pressure in Mozambique. According to the IMF, inflation reached 5.7% in 2021, while Oxford Economics notes an indicator of 6.4%. In 2022, the country recorded the highest inflation since the 2016 debt crisis at 9.8% (Oxford Economics — 10.3%). The rapid rise in prices has also jeopardized the food security of the poorest segments of the population.

In 2023, according to the IMF forecast, inflation will be 7.4% and will continue to decline in the medium term. Oxford Economics expects higher inflation rates in the short term (9.8% in 2023) and a decrease in inflationary pressure by 2028.

GDP by PPP per capita shows stable growth since the beginning of 2021. It is expected that the dynamics will continue until 2028. Nevertheless, GDP per capita remains one of the lowest in the world.

Regions
Countries
Tags