Maputo, MOZAMBIQUE, March 13, 2023-/African Media Agency(AMA)/Mozambique’s economic recovery is accelerating, with growth reaching 4.1% in 2022, despite global economic problems marked by rising fuel and food prices.
The medium-term economic outlook is positive, with growth expected to accelerate to 6% during 2023-2025, driven by continued service recovery, liquefied natural gas production, and high commodity prices. However, downside risks related to climate shocks, security risks, and food and fuel price pressures could reduce medium-term GDP growth by 4.5%.
9Th edition of the World Bank’s Mozambique Economic Update (MEU) highlighting the role of services in accelerating economic growth and job creation. The report calls for a shift from reliance on agriculture and low-productivity extractives to a development model based on the various sources of growth, productivity, and employment. It further emphasizes reform options to strengthen the role of the service sector as the backbone of the economy.
“Looking for growth, continuous, broad and inclusive requires increasing productivity in services and stimulating the formalization of informal enterprises while strengthening relations between sectors,” said Idah Pswarai–Riddihough, World Bank Country Director for Mozambique, Madagascar, Mauritius, Comoros, and Seychelles. “Services can be a path to inclusive growth and accelerate employment,” he added.
Mozambique’s strong growth performance in recent decades has helped reduce poverty. However, growth has not been sufficiently inclusive. This is partly due to a heavy reliance on extractive industries, with limited linkages to the wider economy, and low productivity in the agricultural sector—the main source of livelihood for the poor.
“With more than half a million people expected to enter the workforce every year, creating more and better jobs is an important challenge for Mozambique,” said Fiseha Haile, World Bank Senior Economist for Mozambique.
The Mozambican government is taking important steps to support economic recovery by stimulating private sector growth, including approving a package of economic acceleration measures in August 2022. The plan comes at the right time, as the economy recovers from a sustained downturn after a series of shocks. , including hidden debt, cyclones, insurgencies, and the COVID-19 pandemic.
Economic renewal shows the need for reforms that can strengthen the role of the private sector and improve access to finance by reducing bank credit costs, as well as providing credit guarantees for small companies. It also recognizes the need to upgrade services to more sophisticated activities—such as ICT, finance, and professional and business services—for the sector to become an engine of inclusive growth and job creation.
Distributed by African Media Agency (AMA) on behalf of of World Bank
The post Mozambique Economic Update: Why Services Matter for Growth and Jobs appeared first on African Media Agency.