In its Africa Pulse report published in October, the World Bank estimates growth of 4% for the Mozambican economy in 2024, one point above the regional average. The forecast is, however, more pessimistic than that of the Mozambican government (5.5 per cent), as well as other international organisations, such as the International Monetary Fund (4.3 per cent).
In its biannual Africa Pulse report, the World Bank revised its growth forecast for sub-Saharan Africa downwards, to 3 per cent in 2024 (up from 2.4 per cent in 2023, but down from the 3.4 per cent forecast in April) and 4 per cent in 2025.
The outlook for Mozambique is more optimistic. World Bank analysts believe that the Mozambican economy could expand by 4 per cent this year and next. The International Monetary Fund (IMF), in its October report, slightly raises this estimate to 4.3% over the next two years.
The government, for its part, in its Economic and Social Plan and State Budget, forecasts GDP (Gross Domestic Product) growth of 5.5 per cent in 2024 (after a rate of 5 per cent in 2023 and 4.4 per cent in 2022). For 2025, the Ministry of Economy and Finance, in the Macro Fiscal Framework 2025-27, estimates a variation of 4.7%, which shows a clearly more optimistic position than the forecasts of international organisations.
Another piece of good news concerns Mozambique’s inflation rate, which, according to the report, should continue its downward trend, estimated at 3.1 per cent this year (less than half the 7.1 per cent recorded in 2023) and 2.8 per cent in 2025. On the other hand, public debt as a percentage of GDP increases from the 93.9 per cent estimated for this year to 97.5 per cent in 2024 and 98.7 per cent in 2025. Analysts warn that the country’s financing needs remain high.
Mozambique stands out as reference interest rate falls
The Bank of Mozambique (BoM) is also highlighted in this report for being the first (and boldest) in the region to reverse the cycle of restrictive monetary policy measures. The MIMO reference interest rate, which was 17.5% in January, was successively reduced throughout the year, reaching 14.5% in July (a drop of three basis points, the largest in sub-Saharan Africa) and 13.5% in October.
In the chapter on worker qualifications, the report cites an additional study entitled Digital Skills Gap, carried out by the World Bank and the IFC (International Finance Corporation). This study points to a growing demand for workers with digital skills in sub-Saharan Africa. In Mozambique, one of the five countries analysed, it is estimated that by 2030 between 20% and 25% of jobs will require workers with this profile.
Economic Outlook for Sub-Saharan Africa
Economy: The recovery in growth in the region (from 2.4 per cent in 2023 to 3 per cent in 2024) is driven by private consumption and investment. The reduction in expectations compared to the April forecasts is partly explained by the collapse of economic activity in Sudan. Without Sudan, sub-Saharan Africa would have expanded by 3.5 per cent.
However, GDP per capita is growing almost insignificantly, at 2 per cent below the 2019 level. The annual increase in per capita income (with a growth rate of just 0.5 per cent over the last two years) is insufficient to reduce extreme poverty; the number of people in poverty has risen from 448 million in 2022 to 464 million in 2024.
Inflation: Inflation in sub-Saharan Africa is expected to fall from 7.1 per cent in 2023 to 4.8 per cent in 2024 and 4.6 per cent in 2025. The stabilisation of prices, after peaking in 2022, is due to the easing of supply chain disruptions, the effects of tighter monetary and fiscal policies and the stabilisation of currencies. Around 70 per cent of countries (including Mozambique) are expected to experience lower inflation in 2024-25.
Monetary and fiscal policy: Central bank benchmark interest rates will continue to be cut, with the most significant cuts this year occurring in Mozambique, Kenya, Namibia and Uganda, as inflation approaches the stipulated target. The average budget deficit in the region is expected to fall from 3.9 per cent of GDP in 2023 to 3.3 per cent in 2024 and 2.9 per cent in 2025. Only 29 countries are expected to improve their budget balance; however, of these, only 10 will have a deficit of less than 3 per cent of GDP.
Public debt: The rate of public sector indebtedness in sub-Saharan Africa is expected to remain high and stable at around 58 per cent of GDP in 2024 (a rate of 97.5 per cent is forecast for Mozambique). The main problem is the interest on servicing the external public debt, valued at 19 billion dollars. Around 80 per cent of these payments are owed to private creditors and governments that are not members of the Paris Club.
Text: Jaime Fidalgo
