Figure 1: Merchandise Trade Balance in Mozambique (2015-2018)
Source: UNCTAD 2019, UNCTADStat Database.
Total merchandise imports to Mozambique have increased to USD 6.8 billion in 2018, from an annual average of USD 6.3 billion from 2015 to 2017[1]. Exports have also increased to USD 5.2 billion in 2018, from an annual average of USD 3.8 billion from 2015 to 2017[2]. The stronger growth in exports has improved Mozambique’s merchandise trade balance to a deficit of -USD 1.6 billion in 2018 from a deficit averaging -USD 2.6 billion from 2015 to 2017[3]. The growth in exports has had a short-term positive impact on gross official reserves supported by depreciation of the MZN.
Figure 2: Gross Official Reserves in Mozambique (2016-2024)
Sources: IMF 2019, Mozambique 2019 Article IV Report; IMF 2016, Mozambique 2015 Article IV Report. Note: (*) Figures from 2019 onwards are projections from the IMF, 2019.
Gross official foreign exchange reserves increased to USD 3.1 billion in 2018 from an annual average of USD 2.6 billion from 2015 to 2017[4]. During this period, the MZN appreciated by 4.9% in 2018 to MZN 60.9 per USD (2017: -1.3%)[5]. Imports have grown due to the appreciation in the currency because it followed significant depreciation in 2015 and 2016. The MZN depreciated by an annual average of -29.3% in 2015 and 2016 from MZN 31.5 per USD in 2014 to MZN 63.1 per USD in 2016[6]. Gross official reserves are projected to decrease to USD 2.9 billion in 2019, which is equivalent to 5.1 months’ import cover[7]. In the forward-looking medium-term from 2020 to 2024, gross official reserves are projected to increase to an annual average of USD 3.2 billion (approx. 4.9 months’ import cover)[8]. The stronger growth in exports and growing imports has not led to a significant improvement of Mozambique’s current account balance and in the forward-looking medium-term the current account balance is projected to deteriorate to its medium-term current account deficit levels.
Mozambique’s current account balance deteriorated to a deficit of -USD 4.4 billion in 2018, from a deficit averaging -USD 3.8 billion from 2015 to 2017[9]. Apart from the growth in merchandise imports, which deteriorated the current account balance, the balance of services trade and imports related to natural gas megaprojects have also increased leading to further deterioration of the current account balance. The balance of services trade is projected to have deteriorated to a deficit of -USD 3.4 billion in 2018 from a deficit averaging -USD 2.2 billion from 2015 to 2017[10]. Mozambican imports for megaprojects increased to USD 1.3 billion in 2018 from an annual average of USD 768.7 million from 2015 to 2017[11]. The current account balance is projected to deteriorate to a deficit of -USD 8.8 billion (approx. -58.0% of GDP) in 2019[12]. In the forward-looking medium-term from 2020 to 2024, the current account balance is projected to deteriorate further to annual average deficit of -USD 11.9 billion (approx. -61.2% of GDP)[13].
Figure 3: Current Account Balance in Mozambique (2016-2024)
Sources: IMF 2019, Mozambique 2019 Article IV Report; IMF 2016, Mozambique 2015 Article IV Report. Note: (*) Figures from 2019 onwards are projections from the IMF, 2019.
However, Mozambique is still dependent on raw commodity exports which have been affected by commodity price volatility and the general decline in commodity prices since 2014. For example, coal prices have been volatile having declined by an annual average of -15.5% in 2014 and 2015 to USD 57.1 per MT in 2015, before recovering to its medium-term average of USD 82.3 per MT from in 2016 to 2018[14]. Aluminium prices have also been volatile having declined by an annual average of -4.5% from 2014 to 2016 to USD 1604.2 per MT in 2016, before recovering to its medium-term average of USD 2038.1 per MT in 2017 and 2018[15]. Coal and aluminium exports constituted 54.1% of Mozambique’s total export earnings in 2018 which has increased from the average of 46.4% from 2015 to 2017 (2014: 36.6% of exports)[16]. In spite of this concentration of exports, Mozambique is well integrated in terms of regional trade with neighbouring countries in SADC but its trade is unbalanced.
Figure 4: Nominal Exchange Rate in Mozambique (2015-2018)
Sources: IMF 2019, Mozambique 2019 Article IV Report; BoM 2016, Annual Report 2015.
The top exports from Mozambique to the SADC are natural gas, electricity, petroleum, coal and fertilisers, which constituted 15.2% of total exports in 2018 (2015-‘17: 17.5% of total exports)[17]. The value of the top-five exports from Mozambique to SADC increased to USD 789.5 million in 2018 from an annual average of USD 646.2 million from 2015 to 2017[18].
The value of total exports from Mozambique to the SADC increased to USD 1.1 billion (approx. 20.6% of total exports) in 2018 from an average of USD 864.3 million (approx. 23.0% of total exports)[19]. These are relatively good or above-average levels of intra-regional trade given that the SADC average intra-regional exports level was 17.9% of total exports in 2018. The SADC intra-regional exports, meaning total exports amongst SADC countries, as a share of total exports to the world decreased from an average of 20.8% from 2015 to 2017[20]. Given Mozambique’s balance of merchandise trade in the region, there is room to increase its exports to SADC countries.
Mozambique’s top-five imports from SADC are electricity, metal ores, pig iron, commercial vehicles and petroleum. These imports constituted only 7.3% of total imports to Mozambique in 2018 (2015-‘17: 9.3% of total imports)[21]. The value of the top-five imports from SADC to Mozambique decreased to USD 497.8 million in 2018 from an annual average of USD 562.1 million from 2015 to 2017[22].
The value of Mozambique’s total imports from SADC increased to USD 2.1 billion (approx. 30.2% of total imports) in 2018 from an annual average of USD 2.0 billion (approx. 32.2% of total exports) from 2015 to 2017[23]. These are very high levels of intra-regional trade given that the SADC average intra-regional imports level was 20.9% of total imports in 2018[24]. The SADC intra-regional imports, meaning total imports amongst SADC countries, as a share of total imports from the world increased only from an average of 20.7% from 2015 to 2017[25].
Table 1: SADC Regional Trade for Mozambique (2015-2018)
Source: UNCTAD 2019, UNCTADStat Database.
Mozambique maintains a persistent merchandise trade deficit in SADC which decreased to a deficit of -USD 981.3 million in 2018 (2015-’17: -USD 1.2 billion). Mozambique is quite reliant on the SADC for its imports and there is significant room to increase its exports to SADC countries. This would make Mozambique’s intra-regional trade balance in SADC more equitable.
[1] UNCTAD 2019. UNCTADStat Database, United Nations Conference on Trade and Development: Geneva. Available At: https://unctadstat.unctad.org/ [Last Accessed: 26 September 2019].
[2] UNCTAD 2019. UNCTADStat Database, ibid.
[3] UNCTAD 2019. UNCTADStat Database, ibid.
[4] IMF 2019a. Mozambique 2019 Article IV Report, International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 15 October 2019]; IMF 2016. Mozambique 2015 Article IV Report, International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 15 October 2019].
[5] IMF 2019a. Mozambique 2019 Article IV Report, ibid.
[6] IMF 2019a. Mozambique 2019 Article IV Report, ibid.; BoM 2016. Annual Report 2015, Bank of Mozambique: Maputo. Available At: http://www.bancomoc.mz/ [Last Accessed: 15 October 2019].
[7] IMF 2019a. Mozambique 2019 Article IV Report, ibid.
[8] IMF 2019a. Mozambique 2019 Article IV Report, ibid.
[9] IMF 2019a. Mozambique 2019 Article IV Report, ibid.; IMF 2016. Mozambique 2015 Article IV Report, ibid.
[10] IMF 2019a. Mozambique 2019 Article IV Report, ibid.; IMF 2016. Mozambique 2015 Article IV Report, ibid.
[11] UNCTAD 2019. UNCTADStat Database, ibid.
[12] IMF 2019a. Mozambique 2019 Article IV Report, ibid.
[13] IMF 2019a. Mozambique 2019 Article IV Report, ibid.
[14] IMF 2019b. IMF Primary Commodity Prices, International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 4 October 2019].
[15] IMF 2019b. IMF Primary Commodity Prices, ibid.
[16] UNCTAD 2019. UNCTADStat Database, ibid.
[17] UNCTAD 2019. UNCTADStat Database, ibid.
[18] UNCTAD 2019. UNCTADStat Database, ibid.
[19] UNCTAD 2019. UNCTADStat Database, ibid.
[20] UNCTAD 2019. UNCTADStat Database, ibid.
[21] UNCTAD 2019. UNCTADStat Database, ibid.
[22] UNCTAD 2019. UNCTADStat Database, ibid.
[23] UNCTAD 2019. UNCTADStat Database, ibid.
[24] UNCTAD 2019. UNCTADStat Database, ibid.
[25] UNCTAD 2019. UNCTADStat Database, ibid.