Mozambique Economy 2008

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 Mozambican government moved rapidly to ratify the Compact and propose a plan for funding.

GDP (purchasing power parity):
$17.82 billion (2007 est.)

GDP (official exchange rate):
$6.955 billion (2007 est.)

GDP - real growth rate:
7.5% (2007 est.)

GDP - per capita (PPP):
$900 (2007 est.)

GDP - composition by sector:
agriculture: 23.1%
industry: 30.2%
services: 46.7% (2007 est.)

Labor force:
9.6 million (2007 est.)

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

Unemployment rate:
21% (1997 est.)

Population below poverty line:
70% (2001 est.)

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):
8% (2007 est.)

Investment (gross fixed):
20.3% of GDP (2007 est.)

Budget:
revenues: $2.163 billion
expenditures: $2.623 billion (2007 est.)

Public debt:
22.2% of GDP (2007 est.)

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

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

Industrial production growth rate:
10% (2007 est.)

Electricity - production:
13.17 billion kWh (2005)

Electricity - consumption:
9.127 billion kWh (2005)

Electricity - exports:
12 billion kWh (2005)

Electricity - imports:
9.588 billion kWh (2005)

Oil - production:
0 bbl/day (2005 est.)

Oil - consumption:
13,000 bbl/day (2005 est.)

Oil - exports:
0 bbl/day (2004)

Oil - imports:
13,320 bbl/day (2004)

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

natural gas - production:
191.8 million cu m (2005 est.)

natural gas - consumption:
191.8 million cu m (2005 est.)

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

natural gas - imports:
0 cu m (2005)

natural gas - proved reserves:
122.2 billion cu m (1 January 2006 est.)

Current account balance:
-$726 million (2007 est.)

Exports:
$2.731 billion f.o.b. (2007 est.)

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

Exports - partners:
Netherlands 59.7%, South Africa 15.2%, Zimbabwe 3.2% (2006)

Imports:
$3.028 billion f.o.b. (2007 est.)

Imports - partners:
South Africa 36.3%, Netherlands 15.6%, Portugal 3.3% (2006)

Economic aid - recipient:
$1.286 billion (2005)

Reserves of foreign exchange and gold:
$1.451 billion (31 December 2007 est.)

Debt - external:
$4.284 billion (31 December 2007 est.)

Market value of publicly traded shares:
$NA

Currency (code):
metical (MZM)

Exchange rates:
meticais per US dollar - 26.264 (2007), 25.4 (2006), 23,061 (2005), 22,581 (2004), 23,782 (2003)
note: in 2006 Mozambique revalued its currency, with 1000 old meticais equal to 1 new meticais