The outlook for Mozambique's aluminium-dominated exports is positive, as global demand is expected to grow by an average of 5.7% a year in 2011-12, even though prices are set to weaken slightly in 2012 after a brisk rise in 2011. 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. Coal exports could make a significant contribution from late 2011, but they may be delayed owing to a lack of associated infrastructure. The planned expansion of gas exports should have a positive impact by end-2011. Agricultural export volumes are expected to increase in response to government investment in the sector. In line with our latest commodity price forecasts, we now expect total goods exports to rise from an estimated US$2.7bn in 2010 to US$3.6bn in 2011 and US$4bn in 2012 (compared with US$3.4bn and US$3.6bn respectively). Goods imports will also rise strongly in 2011-12, to an average of US$4.9bn (previously forecast at 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, we now expect the trade deficit to widen from an equivalent of 11.2% of GDP in 2011 to 12.3% of GDP in 2011, before narrowing to 9.7% of GDP in 2012.

The services deficit is expected to drop from US$528 in 2010 (an estimated 6.2% of GDP) to an average of US$530m (5%) in 2011-12 as an increase in service imports for the mining sector is more than offset by a recovery in service exports, led by tourism. The income deficit will rise in nominal terms in line with profit repatriation by foreign firms, but owing to rapid economic growth it will keep broadly steady as a proportion of GDP, at 4.5%. In view of the tensions between Frelimo and the country's donors, aid pledges are set to stagnate in 2011-12, so the transfers balance will rise slowly in dollar terms but will fall as a share of GDP, averaging US$720m or 6.8% of GDP. Overall, the current-account deficit is forecast to widen from an estimated 14.3% in 2010 to 15.7% of GDP in 2011 (12.8% previously), before narrowing to 12% of GDP in 2012 (9.6% previously).