The outlook for Mozambique's aluminium-dominated exports is positive, as global demand is expected to grow even though prices are set to moderate in 2011-12. The other two main exports, gas and electricity, are governed by fixed contracts with buyers in South Africa that are priced in rand, and any changes in value will reflect fluctuations in the rand:dollar exchange rate. However, the planned expansion of gas exports will have some positive impact by 2011, as will the increase in coal exports. Agricultural export volumes are expected to increase in response to government investment in the sector. Our revised forecast for a sharp rise in global food prices in 2011 will boost receipts from crops in which the country is a net exporter, although prices are expected to ease in 2012. We expect total goods exports to rise from an estimated US$2.7bn in 2010 to US$3.3bn in both 2011 and 2012. Goods imports will also rise strongly in 2011-12, to an average of US$4.5bn, from an estimated US$3.7bn in 2010, given the outlook for sustained high oil prices and the demand from large-scale investment projects in minerals and infrastructure. Overall, the trade deficit will narrow from an equivalent of 10.9% of GDP in 2011 to 9.5% of GDP in 2012.

The services deficit will drop from US$439m in 2010 (an estimated 4.7% of GDP) to an average of US$414m (3.3%) in 2011-12 as an increase in service imports for the mining sector is more than offset by a recovery in service exports from the tourism and transport sectors. The income deficit will rise in nominal terms in line with profit repatriation by foreign firms, but owing to rapid economic growth will fall as a proportion of GDP, equivalent to 4.3% and 3.9% of GDP in 2011 and 2012 respectively. In view of the chronic tensions between Frelimo and the country's donors, aid pledges are set to stagnate in 2011-12, so the transfers balance will rise in dollar terms but will fall as a share of GDP, averaging US$965m or 7.7% of GDP. In view of these trends, the current-account deficit is forecast to narrow from an estimated 11% of GDP in 2010 to 10.7% of GDP in 2011 and 9.1% of GDP in 2012.