1

ECONOMIC OVERVIEW
MOZAMBIQUE REAL ESTATE CONFERENCE
Enrique Blanco Armas, Maputo, 13 June 2013
 Outline of the Presentation
2

Recent Economic Developments

Reality Check where does Mozambique stand

compared to its peers

External Environment Prospects

Medium Term projections Mozambique

How will Mozambique look like in 25 years time?

 Mozambiques recent growth trajectory
3

Mozambiques economic performance has been very strong since the end of
the Civil War in 1992. The countrys GDP growth from 1993 to 2012
averaged 7.4 percent, made possible by sound macroeconomic
management, a number of large-scale foreign-investment projects
(megaprojects), and significant donor support.

Source: WDI, World Bank

 Recent Economic Developments
4

Mozambique's economy grew at 8.2percent p.a. in the final quarter of

2012. Overall, at 7.4 percent, growth in 2012 matched the government
target
10 Real GDP Growth in 2012 by sector (percent)
9 2012 4th quarter
8 Agriculture 7.1 6.8
7 Extractive industries 40.7 35.2
6
Manufacturing industry 7.9 9.3
5
Trade and services 8.2 8.0
4
3
Electricity and water -0.4 -8.3
2 Construction 9.8 16.4
1 Transport and
0 communications 10.4 12.7
I II III IV I II III IV
2011 2012
Financial services 12.8 28.6
Public administration 8.9 11.7
Source: INE Education 3.5 2.1
Health and social protection 6.6 6.6
Total GDP 7.4 8.3
Source: INE
 Inflation has increased from record low
5
levels while metical remains stable
By May 2013 yoy inflation has accelerated to 5.1 per cent well within
the GoM target. The acceleration in inflation in the first quarter of the year
is mostly a result of relatively low inflation in the first months of 2012. The
exchange rate also remains relatively stable against major trading
currencies.
5
45 3,8
4 3,7
40 3,6
3
3,5
2 35 3,4
3,3
1 30 3,2
3,1
0
25 3
nov 2012
maj 2012
mar 2012

sep 2012

mar 2013
jul 2012

jan 2013

Set

Dez
Out

Jan
Nov

Fev
Abr

Mai

Mar
Jul
Jun

Ago

MZN/USD MZN/EUR MZN/ZAR (right axis)

Source: INE
Source: Banco de Moambique
 Current account deficit has widened as
6
a result of large investments
Mozambiques current account deficit has widened
from 12% in 2010 to almost 40% in 2012 and is
projected to continue widening.
This is the result of record high FDI ( > US$5 billion
in 2012) with a high import component
The current account is a result of (and financed by)
FDI and therefore not an area of major concern
 Reality check despite strong growth,
7
where is Mozambique vs. peers?
Cereal yield (kg per hectare) GNI per capita, Atlas method (current US$)
4500 8000
4000 7000
3500 6000
3000
5000
2500
2000 4000
1500 3000
1000 2000
500 1000
0
0

Source: WDI, World Bank

Source: WDI, World Bank
Private Sector investment (% of GDP)
Mortality rate, infant (per 1,000 live births) 30

80 25
70
20
60
50 15
40
10
30
20 5
10
0
0

Source: WDI, World Bank Source: WDI, World Bank

 External Environment Prospects
8

GDP Growth prospects

10%

8% The external environment (commodity

6%
prices, growth prospects) can affect
4%

2%
Mozambique through trade, investment
0%
2011 2012 2013 2014 2015
and as importantly donor aid.
-2%
Economic troubles in Europe may affect
Brazil China European union
India South Africa Sub-Saharan Africa donor financing.
World (all countries)

Source: GEP, World Bank

Commodity prices prospects, 2012-17 Aluminium ($/mt)
98 17 3000
16,5
96 2500
16
94
2000
15,5
1500
92 15
1000
14,5
90
14
500
88
13,5 0
2012 2013 2014 2015 2016 2017
86 13
2012 2013 2014 2015 2016 2017 Aluminium ($/mt)
Coal, Australian, US$/mt, LHS LNG, Japanese, US$/mmbtu, RHS
Source: GEP, World Bank
Source: GEP, World Bank
 Medium Term Prospects - Mozambique
9

GDP growth 2006-17 Inflation 2006-17

10% 15%

8% 12%

6% 9%

4% 6%

3%
2%

0%
0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: World Bank Source: World Bank

Budget Deficit 2006-17 Current account deficit 2006-12

8% 60%

50%
6%
40%

4% 30%

20%
2%
10%

0%
0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: World Bank Source: World Bank

How will Mozambique look like in 25 years time?
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The development of coal and gas represents an opportunity for Mozambique

but also a challenge. It will need to develop these resources, and then it will
need to ensure it captures a fair share of the rents and uses them wisely. Will
Mozambique look like Nigeria or Botswana in 25 years time?
Alternative per capita growth scenarios for Mozambique - Botswana vs. Nigeria
3500

3000

2500
GDP per capita (US$)

2000

1500

1000

500

Moz GDPpC Nigeria growth Moz GDPpC Botswana growth Nigeria 2010 Morocco 2010
Source: World Bank Staff Estimates
Note: Illustrates GDP per capita trajectory under two scenarios, the first applies Nigerias average GDP per capita growth rate from 1961-2010 to Mozambiques
current GDP per capita until 2040, the second scenario does the same but with Botswanas (higher) average GDP per capital growth rate.