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The Economy of Mozambique

Mozambican Economy

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Economy - overview: At independence in 1975, Mozambique was one of the world's poorest countries. Socialist mismanagement and a brutal civil war from 1977-92 exacerbated the situation. In 1987, the government embarked on a series of macroeconomic reforms designed to stabilize the economy. These steps, combined with donor assistance and with political stability since the multi-party elections in 1994, have led to dramatic improvements in the country's growth rate. Inflation was reduced to single digits during the late 1990s, and although it returned to double digits in 2000-06, in 2007 inflation had slowed to 8%, while GDP growth reached 7.5%. Fiscal reforms, including the introduction of a value-added tax and reform of the customs service, have improved the government's revenue collection abilities. In spite of these gains, Mozambique remains dependent upon foreign assistance for much of its annual budget, and the majority of the population remains below the poverty line. Subsistence agriculture continues to employ the vast majority of the country's work force. A substantial trade imbalance persists although the opening of the Mozal aluminum smelter, the country's largest foreign investment project to date, has increased export earnings. At the end of 2007, and after years of negotiations, the government took over Portugal's majority share of the Cahora Bassa Hydroelectricity (HCB) company, a dam that was not transferred to Mozambique at independence because of the ensuing civil war and unpaid debts. More power is needed for additional investment projects in titanium extraction and processing and garment manufacturing that could further close the import/export gap. Mozambique's once substantial foreign debt has been reduced through forgiveness and rescheduling under the IMF's Heavily Indebted Poor Countries (HIPC) and Enhanced HIPC initiatives, and is now at a manageable level. In July 2007 the Millennium Challenge Corporation (MCC) signed a Compact with Mozambique; the Compact entered into force in September 2008 and will continue for five years. Compact projects will focus on improving sanitation, roads, agriculture, and the business regulation environment in an effort to spur economic growth in the four northern provinces of the country.

GDP:

GDP - real growth rate: 6.5% (2008 est.) 7% (2007 est.) 8.5% (2006 est.)

GDP - per capita:

GDP - composition by sector: agriculture: 23.4% industry: 30.7% services: 45.9% (2008 est.)

Population below poverty line:

Household income or consumption by percentage share: lowest 10%: 2.1% highest 10%: 39.4% (2002)

Distribution of family income - Gini index: 47.3 (2002)

Inflation rate (consumer prices):

Labor force: 10.04 million (2008 est.)

Labor force - by occupation: agriculture: 81% industry: 6% services: 13% (1997 est.)

Unemployment rate: 21% (1997 est.)

Budget: revenues: $2.786 billion expenditures: $3.108 billion (2008 est.)

Industries: food, beverages, chemicals (fertilizer, soap, paints), aluminum, petroleum products, textiles, cement, glass, asbestos, tobacco

Industrial production growth rate: 9% (2008 est.)

Electricity - production: 14.62 billion kWh (2006 est.)

Electricity - production by source:

Electricity - consumption: 9.555 billion kWh (2006 est.)

Electricity - exports: 12.83 billion kWh (2006 est.)

Electricity - imports: 9.839 billion kWh (2006 est.)

Oil - production: 0 bbl/day (2007 est.)

Oil - consumption: 14,390 bbl/day (2006 est.)

Oil - exports: 0 bbl/day (2005)

Oil - imports: 13,240 bbl/day (2005)

Oil - proved reserves: 0 bbl (1 January 2006 est.)

Natural gas - production: 1.65 billion cu m (2006 est.)

Natural gas - consumption: 1.45 billion cu m (2006 est.)

Natural gas - exports: 0 cu m (2005 est.)

Natural gas - imports: 0 cu m (2007 est.)

Natural gas - proved reserves: 127.4 billion cu m (1 January 2008 est.)

Agriculture - products: cotton, cashew nuts, sugarcane, tea, cassava (tapioca), corn, coconuts, sisal, citrus and tropical fruits, potatoes, sunflowers; beef, poultry

Exports: $2.693 billion f.o.b. (2008 est.)

Exports - commodities: aluminum, prawns, cashews, cotton, sugar, citrus, timber; bulk electricity

Exports - partners: Italy 19.4%, Belgium 18.4%, Spain 12.5%, South Africa 12.3%, UK 7.3%, China 4.1% (2007)

Imports: $3.292 billion f.o.b. (2008 est.)

Imports - commodities: machinery and equipment, vehicles, fuel, chemicals, metal products, foodstuffs, textiles

Imports - partners: South Africa 36.7%, Australia 8.5%, China 4.6% (2007)

Debt - external: $4.316 billion (31 December 2008 est.)

Economic aid - recipient:

Currency:

Currency code:

Exchange rates: meticais (MZM) per US dollar - 24.125 (2008 est.), 26.264 (2007), 25.4 (2006), 23,061 (2005), 22,581 (2004) note: in 2006 Mozambique revalued its currency, with 1000 old meticais equal to 1 new meticais

Fiscal year: