Leave your homes or get blown up

Good afternoon. New GDP figures, apparently out today (although it’s not clear from the National Statistics Institute’s website) show the economy growing at a healthy rate in the second quarter of this year, matching the rate from the same period last year.

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The economy is still, it seems, bouncing back from the pandemic-induced recession of 2020. But digging into the numbers does not provide optimistic reading for how the economy is developing. The overall growth masks a decline in the secondary sector, such as manufacturing, which is essential to move Mozambique onto a new tier of development.

What is growing — and at quite a phenomenal rate in the quarter in question — is mining and other extractive industries. This is not to be sniffed at; as we noted last week, the extractive industries are to some extent keeping the economy running. But the extent to which they are also putting other activities in the shade, suggests Mozambique is falling victim to ‘Dutch disease’ — where income from primary commodity exports distorts the economy, strengthening the currency and crowding out other, more labour-intensive activities.