Mozambique’s economic growth is expected to slow but remain robust over the medium term, according to Standard Bank economist Robert Bunyi’s mid-year gauge of the country.
Real gross domestic product growth is expected to slow over the next few years as construction activity related to large-scale projects winds down.
Nevertheless, “overall growth remains robust”, according to Bunyi, at 7,8% for 2004 and an expected 7,3% and 6,5% expected for 2005 and 2006 respectively.
Mozambique has progressed from one of the poorest countries in the world and has reduced the proportion of the population living in absolute poverty to 56% from 70% in 1997.
Bunyi expects medium-term economic progress will continue to be underpinned by donor support in the medium term, although private-sector expansion should support domestic revenue collection.
As part of the government’s efforts to widen its revenue base, a new central revenue authority is to be set up this year to broaden the tax base.
Inflation in Mozambique has been in decline this year from 2004’s 12,7% to 7,4% in 2005 as a result of rapid deceleration in food inflation. Bunyi expects inflation to start rising moderately over the course of the year, due to higher fuel prices and import costs, forecasting inflation to average 7% this year and next.
Mozambique has diversified its export base away from traditional exports, such as fish and agricultural products, on the back of increased private investments in mega-projects, aluminium smelting and natural gas.
The country’s trade deficit has narrowed, and as a ratio of its gross domestic product has declined to less than 10% for the first time in 2004 over recent years. — I-Net Bridge