- GDP (PPP):
- $44.7 billion
- 2.2% growth
- 4.0% 5-year compound annual growth
- $1,334 per capita
- Inflation (CPI):
- FDI Inflow:
Mozambique’s economic freedom score is 51.6, making its economy the 153rd freest in the 2021 Index. Its overall score has increased by 1.1 points, primarily because of an improvement in fiscal health. Mozambique is ranked 36th among 47 countries in the Sub-Saharan Africa region, and its overall score is below the regional and world averages.
Mozambique’s economy remained near the bottom of the mostly unfree category this year. Mozambique is one of the world’s 10 poorest countries, and greater economic freedom is just a dream for most of its citizens. The primary problem is weak rule of law, which reflects inadequate protection of property rights, a nontransparent judicial system, and a failure to fight corruption. These shortcomings are almost insurmountable obstacles to development.
IMPACT OF COVID-19: As of December 1, 2020, 131 deaths had been attributed to the pandemic in Mozambique, and the economy was forecast to contract by 0.5 percent for the year.
The Mozambique Liberation Front (FRELIMO), headed since 2015 by President Filipe Nyusi, has been in power since independence from Portugal in 1975. Nyusi was returned to office in a landslide October 2019 election that was deemed neither free nor fair. A 16-year civil war between FRELIMO and the rebel Mozambican National Resistance (RENAMO) ended with a peace agreement in 1992, but there has been sporadic violence since 2013. A brutal Islamist terrorist group in the North threatens the development of recently discovered gas fields. The government is locked in international legal proceedings over liability for the furtive accrual of massive unauthorized government debt. More than half of the population remains below the poverty line and is reliant on subsistence agriculture.
Property rights are recognized by law but are not strongly respected. Land-use titles are not easily transferable. Although the legal system has shown a degree of greater independence in recent years, it remains hampered by executive interference. Numerous arrests made in 2019 were tied to the huge 2016 “hidden debt” scandal, but corruption remains widespread at the highest levels of government.
The top individual income and corporate tax rates are 32 percent. Other taxes include value-added and inheritance taxes. The overall tax burden equals 21.6 percent of total domestic income. Government spending has amounted to 30.9 percent of total output (GDP) over the past three years, and budget deficits have averaged 3.3 percent of GDP. Public debt is equivalent to 109.0 percent of GDP.
The cost of publishing a company’s deed has increased, but business licenses can sometimes be replaced with a notification of activity, and the system for dealing with power outages has been improved. The labor market is rigid. The government has eliminated subsidies for fuel and wheat and has reintroduced an automatic price adjustment mechanism for fuel because of the ongoing financial damage from the 2016 “hidden debt” scandal.
Mozambique has three preferential trade agreements in force. The trade-weighted average tariff rate is 7.1 percent, and three nontariff measures are in effect. Although there is no formal investment screening process, the government approves investments depending on the size of the investment. Lingering institutional and regulatory shortcomings undermine expansion of the private sector. The financial sector, dominated by banking, remains underdeveloped.