Country Report Mozambique October 2009

Summary

Mozambique's ruling party, Frente de Libertacao de Mocambique (Frelimo), is expected to remain in power under the president, Armando Guebuza, as Mozambique prepares for elections that will be held on October 28th.
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% in 2010 and 6.8% in 2011, as foreign direct investment (FDI) inflows recover, agriculture expands and several large-scale mega-projects are due to come into production.
Inflation is expected to rise to an average of 6.4% 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 10.3% of GDP in 2009 to 9.3% of GDP in 2010 and 8.3% of GDP in 2011, mainly because of the widening of the transfers balance resulting from rising donor inflows.

Campaigning has started for Mozambique's legislative elections in October, but has been marred by violence with numerous attacks on opposition party offices and personnel, allegedly by Frelimo supporters.
In addition, donors have raised concerns about the fairness of the electoral process owing to the large number of parties that have been excluded for technical reasons.
An IMF mission has visited Mozambique to carry out the fifth review of the country's policy support instrument (PSI), reporting that the economy has shown resilience in the face of the global economic downturn.
However, the Fund has urged the government to tighten fiscal and monetary policy in 2010 in response to strengthening economic growth in order to avoid unsustainable levels of debt.
Mozambique has improved its ranking in the World Bank's Doing Business in 2010 report, rising five places to 135th out of 183 countries.
India's ArcelorMittal has announced that it is closing its steel-rolling mill in Maputo, owing to the collapse in international steel prices. However, another steel mill has just opened in Maputo's suburbs.

Source: Country Report

This report covers the following industry codes:
SIC Code: 49;1;10
NAICS Code: 22;11;212