Economic studies


Population 32.1 million
GDP per capita 492 US$
Country risk assessment
Business Climate
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major macro economic indicators

  2020 2021 2022 (e) 2023 (p)
GDP growth (%) -1.2 2.3 3.9 4.7
Inflation (yearly average, %) 3.1 5.7 9.8 8.5
Budget balance (% GDP)* -5.4 -4.8 -3.6 -4.3
Current account balance (% GDP) -27.6 -23.8 -34.8 -37.5
Public debt (% GDP) 120.0 106.4 102.5 102.6

(e): Estimate (f): Forecast *Grants included


  • Favourable geographical location: long coastline, proximity to the South African market
  • Significant mineral (coal) and agricultural resources, and hydroelectric potential
  • Huge offshore gas fields discovered in 2010


  • Under-diversified, dependent on commodity prices (aluminium, coal)
  • Inadequate transport and port infrastructure, which constrains the country’s commodity export capacities
  • Banking system constrained by government financing needs
  • Unstable political and security environment
  • Weak governance
  • Difficult climatic conditions


Despite the security threat, economic activity continues to recover

Plunged into its first full year of recession in nearly 30 years in 2020 by the COVID-19 pandemic crisis, the economy returned to modest growth in 2021. In 2022, activity is expected to strengthen, supported by the start of liquefied natural gas (LNG) production at the Coral South offshore site. With an annual capacity of 3.4 million tons, the project is expected to strengthen exports from June. The contribution of net exports to activity will also be driven by the favourable trend in external demand for coal and aluminium. The contribution of investment should remain supportive thanks to opportunities in LNG. However, the Islamist insurgency in Cabo Delgado, a key region for gas production, will delay private investment in the most important projects, dampening its contribution. The security situation forced French company TotalEnergies to halt a major development project (USD 20 billion investment) in April 2021, and a resumption in 2022 remains highly uncertain. A project led by U.S. company ExxonMobil has also been delayed by these issues. While public investment spending is expected to increase, fiscal difficulties will limit the contribution of gross fixed capital formation. Private consumption will continue to recover as the COVID-19 vaccination campaign progresses (less than 10% of the population was vaccinated by the end of 2021) and as restrictions on business activity are lifted. Private consumption should also benefit from the expected growth in agricultural production in 2022, as more than 70% of the population still depends on income from this sector. However, a resumption of the epidemic and forced population displacement in Cabo Delgado will be significant risks.


Twin deficits reduced, but vulnerability persists

In 2022, fiscal consolidation efforts, which were derailed by the pandemic, are expected to resume. By broadening the tax base, modernising the collection system and encouraging taxpayers to meet their tax obligations, the authorities hope to improve tax revenue. The increase in government revenue will be supported by revenues from the start of operations at the Coral South project. Debt payments (15% of government revenue) and the wage bill (more than 50%) will continue to put pressure on government spending, but some measures should be rolled out to curb these expenditures, such as the rule that one civil servant should be hired only after three have left. The increase in capital expenditure will be financed mainly by external grants. These will limit the use of debt, which will still be necessary to finance the deficit, although public debt remains at worrying levels. Delays in gas projects, and the associated revenues, could lead to a reworking of the restructuring agreement for the Eurobond that defaulted in 2017.


In 2022, the large current account deficit will be maintained due to the impact of major projects, especially in LNG, on the trade deficit. However, the suspension of these projects could reduce imports of the requisite capital goods as well as the use of engineering services. The trade balance could also improve with the start of exports from the Coral South site. Although it is less significant, the income deficit will be increased by the repatriation of investment profits. The current account deficit will be slightly mitigated by the transfer surplus, which is mainly maintained by current international cooperation. FDI and international aid will finance much of the deficit. However, the suspension of projects poses a risk to FDI inflows, threatening to put further pressure on the metical and foreign exchange reserves (six months of imports excluding major projects).


Security situation still a concern in Cabo Delgado

The Al-Shabab Islamist group, which has pledged allegiance to the Islamic State, is continuing its insurgency, which began in 2017, in the northern region of Cabo Delgado. Following an attack in late March 2021 on the port city of Palma, TotalEnergies suspended the gas project that it is leading near that location. The support of Rwandan troops from July 2021 made it possible to retake the towns of Mocímboa da Praia, Palma and Mueda, but the major oil companies are unlikely to return until the situation is under better control. Despite the support of SADC troops, the Islamist insurgency is likely to be the main security threat. In contrast, the threat posed by the Renamo military junta (RMJ) appeared to diminish in 2021. The assassination of Mariano Nhongo, the self-proclaimed leader of the RMJ, by Mozambican forces in October 2021 and the surrender of many of its members should prove a blow to the rebellion. These armed factions have been responsible for attacks in the central provinces of Sofala and Manica since 2019. They emerged from Renamo's political wing, breaking away after Renamo’s elected leader, Ossufo Momade, signed a peace agreement with President Filipe Nyusi, who was re-elected for a second five-year term following general elections in October 2019, although these were marred by accusations of fraud. The elections also saw Frelimo, which has been in power since the country obtained its independence in 1975, win 184 of the 250 seats in the assembly. While the situation in the centre of the country has become calmer, the long-standing tensions between these two parties, inherited from the post-independence civil war (1975-1992), could be rekindled in the next national elections, scheduled for 2024. In this context, the social climate remains extremely tense. The unstable political environment and corruption contribute to the perception of a difficult business climate.


Last updated: February 2022

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