Mozambique is a really interesting country to study from an economic development perspective. Some useful information for discussion in class.
Rapid economic growth
In recent years it has experienced one of the fastest GDP growth rates in the world well in excess of 10 per cent per annum. Real GDP growth is forecast to slowdown to 7% in 2015 as a result of severe floods in the north of the country last January which impacted agricultural output and transportation. This emphasises the vulnerability of low income countries to the effects of volatile weather patterns linked directly to the effects of climate change.
High dependency on farming, coal and (in the future) natural gas
At the heart of their recent growth has been surging coal production and new investment in natural gas and infrastructure. Annual growth in agriculture (which accounts for 80% of employment) and manufacturing remain below potential largely for structural reasons, including infrastructure constraints and an under-developed labour market.
Inflation
Rapid growth has also contributed to relatively high inflation which is is set to be around 5% on average this year, with lower food and fuel prices balancing pass-through effects from the a depreciation of the Mozambique currency.
Inward investment
One of the major factors affecting Mozambique in recent years has been their top ranking for inward foreign direct investment within the African continent. Mozambique is forecast to receive around $5 bn in 2015, close to 30% of GDP, driven by investments in mining and gas. In spite of lower fuel prices, Andarko (US) and Eni (Italy) are hoping to start full-scale production of liquified natural gas (LNG) LNG in 2020 at the earliest.
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