The International Monetary Fund (IMF) revised its forecast for growth in the Mozambican economy in 2024 and 2025 to 4.3 per cent, down from the 5 per cent estimated in the April report, although above the average expected for sub-Saharan Africa, which is 3.6 per cent and 4.2 per cent respectively.
According to the IMF, this growth represents a decrease of 0.7 percentage points on the previous forecast and also falls short of the target set in Mozambique’s State Budget (5.5 per cent) for this year. In comparison, the World Bank estimates slightly lower growth of 4 per cent.
The revision comes after the analysis of the Economic Outlook for Sub-Saharan Africa, presented at the end of October. Abebe Selassie, IMF director for Africa, pointed out that the regional average growth will be 3.6 per cent in 2023 and 4.2 per cent in 2025.
‘This pace is not enough to significantly reduce poverty or to make up for the ground lost in recent years, let alone to meet the development challenges ahead. Per capita income growth in the region, at less than 2 per cent, is insufficient for rapid improvements in the quality of life or for sustained poverty reduction,’ added Selassie.
Lower interest rates in Mozambique and other African countries
In response to the easing of inflationary pressures, several African countries, including Mozambique, Ghana, Botswana and Rwanda, have begun to cut their interest rates. The trend is taking place in a context of improving macroeconomic imbalances, as Selassie pointed out, when he mentioned that budget deficits and inflation rates have been falling, approaching pre-crisis levels.
Inflation falling, but public debt rising
Although a third of African countries still have double-digit inflation, the IMF projects the regional average to fall from 18.1 per cent in 2024 to 12.3 per cent in 2025. Mozambique is following this downward trend, with inflation forecast at 3.5 per cent in 2024 and 4.3 per cent in 2025, well below the 10.4 per cent and 7 per cent recorded in the last two years.
However, Mozambique’s public debt continues to grow, representing 96 per cent of GDP in 2023 and projected to reach 96.5 per cent in 2024. According to the IMF, many countries in the region will face challenges in debt management, allocating the resources available for development and replenishing reserves.
Global outlook: United States and China drive stability
In the global economy, the IMF expects stable growth of 3.2 per cent for 2024 and 2025, underpinned by improved forecasts for the United States (2.9 per cent) and China (5.2 per cent). This growth compensates for the slowdown in advanced economies such as Germany, Japan and the United Kingdom, where the expected expansion will not exceed 1% next year.
Text: Jaime Fidalgo
