Inflation in Mozambique is projected to rise to 4.8% in 2025 and further increase to 5.2% in 2026, driven by escalating local food prices, according to a financial institution within the African Economic Outlook (AEO) 2025 report.
These forecasts follow a moderate GDP growth of 1.8% in 2024, attributed to “declines in production within extractive industries and agriculture,” succeeding a 5.4% growth in 2023, with a noted decrease in inflation from 7% in 2023 to 3.2% in 2024.
The budget deficit is anticipated “to rise to 5.4% of GDP in 2025 and later decrease to 4.5% in 2026 due to fiscal consolidation efforts.”
The AEO 2025 was released today during the annual meetings of the African Development Bank (ADB) happening in Abidjan, Côte d’Ivoire, focusing on mobilizing the continent’s resources and reducing external dependency.
For Mozambique, the principal risks to growth include “climate change, social unrest and its impact on economic activities, cuts in foreign aid, and global trade tensions.”
The ADB highlights the urgency of improving public spending efficiency, diversifying export markets, and fostering dialogue “among all political parties.”
One indicator highlighted in the analysis is the low tax-to-GDP ratio, around 23%, “below regional standards, indicating unrealized fiscal potential.”
“Revenue mobilization is constrained by illicit financial flows, estimated annually at $1.3 billion (€1.15 billion), and weak tax administration,” it added.
Moreover, the state’s “heavy payroll” amounts to an average of 90% of fiscal revenue (2021-23), and increasing debt servicing obligations significantly limit the margin for development spending.”
“Exiting the Financial Action Task Force (FATF) grey list, combatting illicit financial flows, and implementing public-private partnership regulations will be essential tasks to improve the investment climate and enhance economic resilience,” it concluded.
*** The Lusa agency traveled at the invitation of the African Development Bank (ADB) ***
