Country Report Mozambique November 2009

Outlook for 2010-11

• The ruling party, Frelimo, is expected to consolidate its grip on power under the president, Armando Guebuza, after initial results indicated that both won convincingly in the October legislative and presidential elections.
• Although no changes to the donor-led economic programme are expected under Mr Guebuza, progress on reform could slow, given opposition to some of the proposed changes within the cabinet and from Frelimo hardliners.
• Foreign investment in the mining sector is expected to pick up as improved access to financing for foreign companies enables them to step up their exploration activities.
• Real GDP growth is forecast to rise strongly, to 6.1% in 2010 and 6.8% in 2011 as foreign direct investment inflows recover and agriculture expands, and with several large-scale mega-projects due to come into production.
• Inflation is expected to remain relatively high, at an average of 6.5% in 2010 and 6.2% in 2011, in response to rising government spending and domestic consumption, as well as the recovery in international commodity prices.
• The current-account deficit is forecast to narrow from an estimated 9.3% of GDP in 2009 to 6.6% of GDP in 2010 and 5.7% of GDP in 2011, owing mainly to the narrowing of the trade deficit resulting from higher aluminium prices.

Monthly review

• Voting has taken place in Mozambique's legislative and presidential elections, with observers reporting a peaceful and well-organised poll.
• The rising opposition party, Movimento Democratico de Mocambique (MDM), failed to overturn its exclusion from nine of 13 constituencies in the elections, prompting criticism that the poll was unfair.
• Early results indicated a sweeping victory for Frelimo and Mr Guebuza, although official results were not due to be published until November 12th.
• A report on the impact of Mozambique's poverty reduction strategy on boosting agricultural productivity and reducing rural poverty has concluded that it has largely failed to achieve its objectives.
• Mozambique's economy has continued to show resilience in the face of the global economic slowdown, with new data indicating that real GDP grew by 5.6% in the second quarter of 2009 compared with the same period in 2008.
• The transport minister, Paulo Zucula, has announced that a new, 2,000-km railway line will be built through Nampula province to the deepwater port of Nacala, which will transport coal from the Moatize mega-project.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;89;1;65;47
NAICS Code: 52;81;11;53;48