Major Macro Economic Indicators

STRENGTHS • Favourable geographic situation: long coastline, proximity to the South African market • Considerable mining (coal), agricultural and hydroelectric resources • Huge gas resources discovered offshore (2010) • Support from foreign donors and investors (FDI) for the funding of mining and gas infrastructures WEAKNESSES • Poor diversification; dependence on raw materials prices (aluminium, coal) • Inadequacy of transport and port infrastructures, which greatly restricts capacity for the export of raw materials • Heavy dependence on international aid and on the South African economy • Weak governance RISK ASSESSMENT More sustained growth in 2014, driven by the industrial sector Growth, which was marginally lower in 2013 because of the impact of the heavy flooding, affecting the country at the beginning of the year, is expected to pick up in 2014. Coal production and especially exports, impeded in 2013 by occasional interruptions of the Sena rail link (floods, targeted Renamo actions), will again drive growth. Manufacturing sector (cement) activity is expected to rise, due to improved electricity supply after the technical difficulties encountered in the exploitation of the Cahora Bassa dam, Mozambique’s main source of electrical energy. Reconstruction of the infrastructure damaged by the floods, particularly in the area of transport, will favour the construction sector activity. Services, particularly financial services, will remain buoyant. Wage increases will sustain household consumption. This year, inflation is expected to remain below the 6% ceiling set by the monetary authorities. The rise in prices is likely to be cushioned by the metical’s appreciation against the South African rand (South Africa is the main supplier of goods imported by Mozambique, except for fuel) and the high level of interest rates.