Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

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 by -1.2% in 2020 (IMF). Driven by the full lifting of COVID-related restrictions, a strong vaccination campaign and the start of liquefied natural gas (LNG) production at the Coral South offshore site, GDP growth increased by 3.7% in 2022, from 2.3% in 2021 (IMF). It is expected to further accelerate to 4.9% in 2023 and 8.2% in 2024, supported by offshore gas production and rising mining output (IMF). Among the downside risks are a deterioration of the security situation in the gas-rich Cabo Delgado province, leading to further delays to large gas projects, and the occurrence of natural disasters.

In 2022, despite a challenging global environment, Mozambique’s economy continued to recover from the pandemic-induced recession, boosted by large LNG investments. Solid revenue performance and spending restraint helped improve public finances. Budget deficit decreased from -3.7% GDP in 2021 to -3.4% GDP in 2022 (IMF). According to IMF estimates, fiscal deficit will deteriorate to -4.3% GDP in 2023 before decreasing to -3.4% GDP in 2024 and starting a medium-term consolidation. Public debt decreased from 106.4% GDP in 2021 to 102.4% GDP in 2022, but it is expected to slightly rise to 102.6% GDP in 2023 before reducing to 99.8% in 2024 (IMF). Progress has been made in debt restructuring but Mozambique remains over-indebted. Driven by global fuel and food prices and tropical storms that impacted domestic food supply, inflation soared from 5.7% in 2021 to 11.3% in 2022 (IMF). Tight monetary stance is expected to bring inflation below the central bank’s target of less than 10% in 2023 (8.6%) and 2024 (8.2%) (IMF). In May 2022, the IMF approved a three-year arrangement under the Extended Credit Facility, for about USD 456 million. This program aims to support the economic recovery, reduce public debt and financing vulnerabilities, and foster higher and more inclusive growth through structural reforms. 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 3.9% in 2021 according to the World Bank (modeled ILO estimate). However, according to the African Development Bank, the unemployment rate was 25% in 2018, and among young people it reached 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).

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