Mozambique Economic Update: Getting Agricultural Support Right [EN/PT]

Maputo, June 23, 2022 — After multiple consecutive shocks, including the COVID-19 pandemic, which led to the first recession in almost three decades, Mozambique economy has started to recover but under considerable uncertainty.gearbox

The World Bank launches today the 8th edition of its Economic Update on Mozambique. The report— organized in two parts—first assesses the country’s economic recovery from the COVID-19 crisis and presents its economic outlook. The second part discusses the potential offered by agriculture to promote a sustainable and more inclusive recovery, and outlines reform options for realigning agricultural support policies and programs towards competitiveness, climate resilience and food security objectives.agricultural gearbox

The report notes that Gross Domestic Product (GDP) growth reached 2.2 percent in 2021, as favorable weather conditions supported agricultural growth, agricultural reducerand the gradual lifting of containment measures boosted private consumption, fostering services recovery. However, the recovery has not been sufficiently broadbased. Despite the gradual uptick in domestic and global demand, growth in the extractives and manufacturing sectors remained subdued. Several constraints dampened the overall economic performance, notably theagricultural gearbox suspension of multi-billion LNG projects due to escalation of insurgency, tighter monetary policy, and new waves of COVID-19 infections.agricultural gearbox

Despite continued significant fiscal pressures, revenue collection has held up and expenses have been kept in check. The overall fiscal deficit is estimated to agricultural reducerhave declined from 5.7 percent of GDP in 2020 to 4.5 percent in 2021. However, domestic public debt has continued to rise as the authorities resorted to domestic market to fulfill financing needs, given Mozambique’s limited access to external financing. The domestic debt stock reached 22 percent of GDP in 2021, up from 16 percent in 2019.agricultural gearbox

Economic growth is expected to accelerate in thagricultural gearboxe medium term, averaging 5.7 percent between 2022 and 2024, as demand recovers further, and the economy benefits from the start of LNG production at the ongoing offshore Coral project in 2022 and the expected resumption of larger LNG projects. Recovery in global demand and commodity prices will continue to support export growth, and FDI inflows (mainly linked to LNG) will sustain agricultural gearboxinvestments. Additionally, the three-year ECF arrangement agreed with the IMF for 2022-2025 and budget support from other agricultural reducerdevelopment partners, will further help to strengthen economic recovery, while addressing debt and financing constraints. However, downside risks are substantial and could substantially lower growth. These include rising import prices owing to the Ukraine conflict, further COVID-19 infection waves, and insurgency in the north.agricultural gearbox