Mozambique sees growth at 5.5%, inflation at 7% in 2024

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Mozambique sees growth at 5.5%, inflation at 7% in 2024

3:43 CAT | 18 Oct 2023

in file CoM

The Mozambican government will maintain a “conservative” monetary policy next year, while forecasting economic growth of 5.5% for 2024, above the estimate for this year, and inflation of 7.0%.

In documents supporting the proposal for the 2024 State Budget Economic and Social Plan (PESOE) which Lusa has accessed today, the government foresees a national macroeconomic situation for next year that “will continue to show positive signs of recovery, despite the challenges in guaranteeing security in areas affected by terrorism, associated with the country’s growing vulnerability to climate change”.

The document, which will be discussed and voted on in the parliamentary session running from October 19th to December 21st, forecasts economic growth for 2024 of 5.5%, “supported by the positive performance expected in the extractive industry, agriculture and transport sectors”.

The Mozambican economy is expected to grow 5% this year (2023), according to a government forecast at the beginning of the year.

Average annual inflation in 2024 is projected to remain in single digits (7.0%), “as a result of maintaining a prudent and conservative monetary policy”, the document also reads.

Annual inflation in Mozambique fell to 4.9% in August and 4.6% in September, from 5.7% in July, explained, according to the Bank of Mozambique “mainly by the fall in food prices favoured by the extension of the cool season, in a context of stability of the metical”.

The central bank’s Monetary Policy Committee had on September 22 already decided to maintain the monetary policy interest rate at 17.25%, one of the ongoing strict monetary policy measures designed to contain the rise in inflation.

Among the “main macroeconomic assumptions” defined in the PESOE, the document adds, is the goal of reaching US$9,703 million in exports of goods and the constitution of Net International Reserves (RIL) worth US$2,235 million, “corresponding to three months of coverage of imports of non-factor goods and services, excluding megaprojects”.

The macroeconomic scenario of 5.5% growth in gross domestic product (GDP) is 0.5 percentage points higher than that of the International Monetary Fund.

According to the National Statistics Institute, Mozambique GDP recorded growth of 4.2% and 4.7% in the first and second quarters of 2023 respectively, representing accumulated growth of around 4.4%.

Source: Lusa