Mozambique Economic Update, December 2019 : Mind the Rural Investment Gap

As 2019 drew to a close, a year when Mozambique faced devastation caused by two severe cyclones, the country looks ahead having made significant progress in terms of economic stability, having strengthened its external buffers and having improved i...

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Main Author:	World Bank
Format:	Report
Language:	English
Published:	World Bank, Washington, DC 2020
Subjects:	ECONOMIC GROWTH EXCHANGE RATE EXTERNAL SECTOR FISCAL TRENDS MONETARY POLICY RURAL INVESTMENT BASIC INFRASTRUCTURE PUBLIC INVESTMENT
Online Access:	http://documents.worldbank.org/curated/en/480651580155354219/Mozambique-Economic-Update-Mind-the-Rural-Investment-Gap http://hdl.handle.net/10986/33280

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spelling	okr-10986-332802021-06-14T10:02:23Z Mozambique Economic Update, December 2019 : Mind the Rural Investment Gap World Bank ECONOMIC GROWTH EXCHANGE RATE EXTERNAL SECTOR FISCAL TRENDS MONETARY POLICY RURAL INVESTMENT BASIC INFRASTRUCTURE PUBLIC INVESTMENT As 2019 drew to a close, a year when Mozambique faced devastation caused by two severe cyclones, the country looks ahead having made significant progress in terms of economic stability, having strengthened its external buffers and having improved its fiscal position. The metical has been broadly stable since mid-2017, contributing to reduced inflationary pressures and providing room for an appropriately cautious monetary policy easing cycle. Growing investment flows, mostly linked to the extractive industries, have bolstered international reserves. Additional progress has been made in fiscal management with a notable reduction in the primary deficit between 2015 and 2018 and significant efforts to protect priority spending. Plus, with the progress to date in advancing its LNG interests, there is much to anticipate from the coming years. So, in this context and as the government enters a new term, where should the focus of policy makers be? The challenge remains to be growth. Growth was set further back in 2019 as Cyclones Idai and Kenneth and slower coal production affected output and is expected to fall to around 2.3 percent in 2019, down from 3.3 percent in 2018. With a population growth rate of 2.8 percent, this translates into a decline in the standard of living. Poverty has been further aggravated by the cyclones, which are likely to have impacted both the urban and rural poor in the affected areas. Growth is expected to accelerate with developments in the LNG sector and progress in post-cyclone reconstruction. But much of this expected growth is generated from the demand side of the economy, namely extractives-led investment and growing consumer demand, and less so from the supply side such as manufacturing, backbone services or non-extractive export growth. So, having put muchof the past economic volatility behind, structural reforms for more sustainable and inclusive growth must return to the center of the agenda, with the objective of recovering from the recent cyclones in the short-term and, in the medium term, of using the LNG opportunity to produce, export and employ. 2020-02-03T22:15:03Z 2020-02-03T22:15:03Z 2019-12 Report http://documents.worldbank.org/curated/en/480651580155354219/Mozambique-Economic-Update-Mind-the-Rural-Investment-Gap http://hdl.handle.net/10986/33280 English CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Economic & Sector Work Economic & Sector Work :: Economic Updates and Modeling Africa Mozambique
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ECONOMIC GROWTH EXCHANGE RATE EXTERNAL SECTOR FISCAL TRENDS MONETARY POLICY RURAL INVESTMENT BASIC INFRASTRUCTURE PUBLIC INVESTMENT
spellingShingle	ECONOMIC GROWTH EXCHANGE RATE EXTERNAL SECTOR FISCAL TRENDS MONETARY POLICY RURAL INVESTMENT BASIC INFRASTRUCTURE PUBLIC INVESTMENT World Bank Mozambique Economic Update, December 2019 : Mind the Rural Investment Gap
geographic_facet	Africa Mozambique
description	As 2019 drew to a close, a year when Mozambique faced devastation caused by two severe cyclones, the country looks ahead having made significant progress in terms of economic stability, having strengthened its external buffers and having improved its fiscal position. The metical has been broadly stable since mid-2017, contributing to reduced inflationary pressures and providing room for an appropriately cautious monetary policy easing cycle. Growing investment flows, mostly linked to the extractive industries, have bolstered international reserves. Additional progress has been made in fiscal management with a notable reduction in the primary deficit between 2015 and 2018 and significant efforts to protect priority spending. Plus, with the progress to date in advancing its LNG interests, there is much to anticipate from the coming years. So, in this context and as the government enters a new term, where should the focus of policy makers be? The challenge remains to be growth. Growth was set further back in 2019 as Cyclones Idai and Kenneth and slower coal production affected output and is expected to fall to around 2.3 percent in 2019, down from 3.3 percent in 2018. With a population growth rate of 2.8 percent, this translates into a decline in the standard of living. Poverty has been further aggravated by the cyclones, which are likely to have impacted both the urban and rural poor in the affected areas. Growth is expected to accelerate with developments in the LNG sector and progress in post-cyclone reconstruction. But much of this expected growth is generated from the demand side of the economy, namely extractives-led investment and growing consumer demand, and less so from the supply side such as manufacturing, backbone services or non-extractive export growth. So, having put muchof the past economic volatility behind, structural reforms for more sustainable and inclusive growth must return to the center of the agenda, with the objective of recovering from the recent cyclones in the short-term and, in the medium term, of using the LNG opportunity to produce, export and employ.
format	Report
author	World Bank
author_facet	World Bank
author_sort	World Bank
title	Mozambique Economic Update, December 2019 : Mind the Rural Investment Gap
title_short	Mozambique Economic Update, December 2019 : Mind the Rural Investment Gap
title_full	Mozambique Economic Update, December 2019 : Mind the Rural Investment Gap
title_fullStr	Mozambique Economic Update, December 2019 : Mind the Rural Investment Gap
title_full_unstemmed	Mozambique Economic Update, December 2019 : Mind the Rural Investment Gap
title_sort	mozambique economic update, december 2019 : mind the rural investment gap
publisher	World Bank, Washington, DC
publishDate	2020
url	http://documents.worldbank.org/curated/en/480651580155354219/Mozambique-Economic-Update-Mind-the-Rural-Investment-Gap http://hdl.handle.net/10986/33280
_version_	1764478385158881280

Mozambique Economic Update, December 2019 : Mind the Rural Investment Gap

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