Country Report Mozambique March 2011

Outlook for 2011-12: Economic growth

We estimate real GDP growth of 8.5% in 2010, driven by the minerals sector. Growth is expected to remain brisk in 2011 on the back of increasing inflows of FDI into minerals and infrastructure mega-projects, as well as ongoing donor contributions. Agriculture will benefit from growth in the output of food and cash crops, as well as from the implementation of the government's national food production plan. The recent flooding in the south of the country will have a negative impact on agricultural output, although a relatively small one, as the main producing regions are in the north. Moreover, this loss of agricultural production may be offset by the boost to construction from repairs to flood-damaged infrastructure. Output from industry is expected to rise briskly on the back of strong inflows of foreign investment into the minerals sector, particularly to develop coal reserves. However, industrial production will remain below potential owing to the fitful power supply. The services sector is also expected to continue the strong performance registered in 2010. In particular, hotels and restaurants, and financial services are expected to maintain double-digit growth as tourism and foreign interest in the country's banking sector pick up. Growth is expected to ease in 2011, to a still rapid 7.3%, in line with tougher global economic conditions, before picking up slightly in 2012, to 7.5%, largely on the back of increased coal production.

© 2011 The Economist lntelligence Unit Ltd. All rights reserved
Whilst every effort has been taken to verify the accuracy of this information, The Economist lntelligence Unit Ltd. cannot accept any responsibility or liability for reliance by any person on this information
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