The services sector plays a significant role in the growth and development of the Mozambique economy, contributing an estimated 52.8% of GDP in 2017, followed by agriculture and industry, contributing 24.3% and 23 % of GDP respectively. Mozambique is also dependent on trade for its economic growth, with trade in goods and services contributing 109% to GDP in 2017. Much of Mozambique’s export earnings, about 85%, are from the diamond export, followed by tourism. The country continues to recover from a setback experienced since 2015 due to declining prices for the country’s traditional export commodities, El Nino drought effects, political instability characterised by military confrontations and a drop in foreign direct investment (FDI) which led to halving the average GDP growth rate from 7% to 3% in 2016. However, GDP growth is projected to increase to 5% in 2018, mainly due to an increase in mineral exports, infrastructure development and upgrading and agricultural production. Plans are in place to continue with the expansion of construction linked to the country’s stimulus programme as well as plans to upgrade electricity and infrastructure.
Mozambique’s debt-to-GDP reached an approximated 125% at the end of 2016. With strong fiscal discipline, aided by an increase in exports, the Mozambican metical firmed against the US$ after experiencing a devaluation of about 40% in 2016 and helped stabilise inflation to 16% in September 2017. The country’s fiscal consolidation effort is also expected to contribute to a decline in expenditure as a share of GDP from an estimated 33.9% in 2016 to 30.5% in 2018. Mozambique’s reserve coverage stood at five months of imports at the end of 2017.
With a population of 29.54 million in 2017 that is expected to grow to 31.16 million in 2019, a GDP of US$12.681 billion in 2017, which is expected to increase to about US$15.017 billion in 2019 and a GDP per capita income of US$429.30 in 2017, projected to rise to US$481.98 in 2019, Mozambique provides a growing market for exports and investors. The country holds opportunities for export diversification to neighbouring South Africa, SADC, SACU, COMESA, Africa, the UK and the US market under the Africa Growth Opportunity Act (AGOA).
The country’s volume of imports of goods and services is expected to increase from about -19.25% in 2017 up to approximately 55.70% in 2019, and the size of exports of goods and services is expected to grow from about 10.39% in 2017 up to approximately 6.34% in 2019, indicating growth in trade. There is potential for investment in construction, tourism, hotel and catering, and infrastructure development.