The African Development Bank (AfDB) announced that it expects Mozambique’s Gross Domestic Product (GDP) to grow by 5.2 per cent this year, as well as in 2025, warning, however, that there will be a slowdown in reforms due to the general elections scheduled for October.
‘The Mozambican economy will grow significantly, from 5% in 2023 and 4.2% in 2022, and inflation is expected to fall back to 5.0% this year and 4.6% in 2025,’ said the AfDB in its report on the ‘African Economic Outlook for 2024’, presented on Thursday (30) in Nairobi, Kenya.
According to the document, real national GDP will be ‘boosted’ by 2025 by the extractive sector, especially gas production, agriculture, private consumption and foreign direct investment.
The AfDB also predicts that Mozambique’s budget deficit will rise to 3.4 percent of GDP in 2024, before falling to 1.3 percent in 2025, ‘as fiscal consolidation and improved revenue collection’ materialise.
The report, presented during the AfDB’s annual meetings, estimates that inflation should fall to an average of 4.8 per cent between 2024-25 due to ‘prudent monetary policy’ and that Mozambique’s current account deficit will grow to 38.1 per cent of GDP in 2024 and 43.0 per cent in 2025, ‘as imports increase’.
However, it warns that there may be changes due to climate change, a slowdown in the implementation of reforms with the next general elections in October and the continuing disruptions in the global supply chain due to Russia’s invasion of Ukraine.
In the annual document, the AfDB recognises that Mozambique has seen ‘a limited structural transformation of the economy over the last 20 years, with a slight shift from agriculture to services’.
It adds that financing the country’s structural transformation ‘requires multiple measures in different timeframes’, i.e. ‘in the short term, the government needs to strengthen debt management capacity, budgetary discipline and regulation of the financial sector. In the medium term, it must speed up debt restructuring under the G20 Common Framework, and multilateral development banks need to implement risk mitigation instruments to attract private investors and provide technical assistance to mobilise climate finance.’
‘In the long term, there is an identified need for international support from the private sector to identify and mitigate the main investment risks in Mozambique,’ he concludes.
The African Development Bank is Africa’s main development finance institution and is meeting in Nairobi for five days (27 to 31 May) to discuss ‘Africa’s Transformation, the African Development Bank Group and the Reform of the Global Financial Architecture’, bringing together more than three thousand participants, including politicians, government officials, economists and experts from various fields from around the world.
This year’s meetings include the 59th Annual Meeting of the Board of Governors of the African Development Bank and the 50th Meeting of the Board of Governors of the African Development Fund.
The country’s real GDP will be ‘boosted’ by 2025 by the extractive sector, especially gas production, agriculture, private consumption and foreign direct investment.
According to AfDB information, despite ‘sustained economic growth over the past two decades, Africa’s economic transformation remains incomplete. The continent’s real Gross Domestic Product (GDP) grew by 4.3 per cent a year between 2000-22, compared to the world average of 2.9 per cent, and many of the world’s ten fastest growing economies were located in Africa.’
‘Despite this solid growth performance, the structure of African economies has not changed significantly over the last two decades, with the agriculture, industry and services sectors accounting for an average of 16 per cent, 33 per cent and 51 per cent respectively of Africa’s overall GDP,’ the institution recalled.
The AfDB has 81 member states, including 53 African countries and 28 countries outside the continent, including Portugal and Brazil.
