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AMR: Mozambique

AMR: Mozambique

We expect GDP growth for 2022 at 3.1% y/y and 3.4% y/y in 2023. We see the C/A deficit easing temporarily to 28.2% of GDP for 2022 and reaching 36% of GDP in 2023. We still expect the USD/MZN to end this year at 66.8.

Nominal GDP
USD14.0 billion
Real GDP growth

GDP growth - FDI and external support should spur growth

We now lift our growth forecast to 3.1% y/y for 2022 and 3.4% y/y for 2023, from respectively 2.8% y/y and 3.2% y/y, due to security improvements in Cabo Delgado, progress in natural gas investment, and an increase in external support as the government resumes negotiations with the IMF for an extended credit facility (ECF) program.

The economic recovery has been slow, but broad-based, supported by base effects and resilient agriculture and mining; we estimate growth of 2.2% for 2021, from a contraction of 1.2% y/y in 2020.

Balance of payments - looming pressures

We maintain that the economic recovery should see imports outgrow exports given basic products’ high import dependency which tends to put pressure on the current account (C/A).

Area4 – Coral South Floating LNG exports will begin in H2:22, expected at USD562.5m this year, further accelerating next year as production increases towards the 3.4 mtpa target. Area1 – Mozambique LNG exports will be delayed to 2026, from 2024 initially, with construction expected to resume in H2:22. This should contribute towards an acceleration in the C/A deficit, to 28.2% of GDP in 2022 and 36% of GDP in 2023. With the implementation of the LNG projects being mainly funded offshore, we foresee corresponding FDI levels supporting the BOP.

Monetary policy – on hold, with a tightening bias

We see the Banco de Moçambique’s MPC keeping policy rates on hold, with monetary policy favouring a tightening bias. The BOM last hiked its main policy rate, MIMO, in Jan 21, by 300bps, to the current 13.25%, to help support the metical and ease inflation pressures. Inflation eased to 6.7% y/y in Dec 21, from 6.8% y/y in Nov, on base effects. Monthly inflation still rose to 1.5% m/m in Dec, from 1% m/m in Nov, on seasonally higher food prices.

FX outlook - stable, with a depreciating bias

The notable disconnection between FX liquidity changes and the FX rate during H2:21 will likely persist in H1:22. We therefore see the metical steady in H1:22, possibly resuming a depreciating bias in H2:22. However, FX liquidity should remain volatile, matching the typical seasonal supply-demand imbalances in the FX market.

Download the annual indicators


Annual indicators
    2018 2019 2020e 2021f 2022f

Population (million)

  28.6 29.3 30.1 30.8 31.6

Nominal GDP (MZNbn)

  895.6 962.6 974.5 1 040.0 1 130.6

Nominal GDP (USDbn)

  14.9 15.4 14.0 15.9 16.8

GDP / capita (USD)

  519.6 524.9 466.6 514.6 531.0

Real GDP growth (%)

  3.4 2.3 -1.2 1.4 2.8

Sovereign Credit Rating

Moody's Caa3 Caa2 Caa2 Caa2 Caa2

Consumer inflation (%) pa

  3.9 2.8 3.1 5.3 5.4


  61.5 61.5 74.9 65.4 70.4


Quarterly indicators    
  Q1:21 Q2:21 Q3:21 Q4:21 Q1:22 Q2:22 Q3:22 Q4:22

GDP (% y/y) pa

0.1 2.0 2.0 1.4 2.6 3.1 2.8 2.8

CPI (% y/y) pe

5.8 5.5 5.5 5.3 4.3 4.6 6.6 6.5

 Policy rate (%) pe

13.25 13.25 13.25 13.25 13.25 13.25 13.25 13.25


67.5 63.5 64.6 65.4 66.8 66.9 68.5 70.4

e: Estimate

F: Forecast

nr — not rated

Source: Banco de Moçambique, Bloomberg, Ministry of Finance, Reuters, INE, Standard Bank Research