World Bank warns of Mozambique’s economic ‘vulnerability’

12 August 2014

The Mozambican economy should grow at a pace above the average for sub-Sahara African countries in 2014, but “remains vulnerable” to risks associated to metal and energy prices, warns the World Bank in the recently released “Mozambican Economic Update”.

Although it does not provide a growth forecast for Mozambique in 2014, the organisation does envisage that gross domestic product (GDP) should expand “well above” the average of the regional economy, which the International Monetary Fund (IMF) estimates will grow by about 5.5 percent.

The World Bank nevertheless stresses that even though high-income economies are showing signs of recovery, demand for Mozambican exports is not accompanying that trend. This heightens the country’s vulnerability to metal and energy prices on international markets and may even impact investments in the country as well as its growth, which the IMF estimates will reach 8.3 percent in 2014.

Regarding the Mozambican economy’s performance in the first quarter of the year, the financial institution highlights the “strong growth” of GDP, on the order of 7.5 percent, much higher than in the previous three months, though lower than the 9.1 percent expansion rate recorded in the year-on-year period.

The World Bank also notes increased state tax revenue which reached about US$1.051 billion at the end of March, boosted by the collection of capital gains taxes on transactions in the natural gas sector amounting to nearly US$150 million.

The organisation also indicates that the country’s current account deficit stood at US$1.100 billion in the first quarter, down about US$200 million year-on-year.

Without going into details, the World Bank notes that exports of “aluminium, sugar and other goods” declined, amid a situation where exported products lost about US$200 million of their value. This can be explained by lower coal prices on international markets. (macauhub/MZ)