An Assessment of External Price Competitiveness for Mozambique

August 1, 2009

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper conducts an assessment of external price competitiveness for Mozambique. A variety of indicators suggest that Mozambique has recently lost external price competitiveness with respect to its major trading partners. Consistent with these indicators, an exchange rate assessment indicates that the metical is overvalued by 26 to 41 percent in real effective terms. If sustained, an overvaluation of this magnitude has the potential to retard economic growth and jeopardize external stability, calling for an adjustment of monetary policy to gradually restore external price competitiveness.

Subject: Current account balance, Global competitiveness, Nominal effective exchange rate, Real effective exchange rates, Real exchange rates

Keywords: competitiveness, current account, price competitiveness, value, WP

Pages:
20
Volume:
2009
DOI:
https://doi.org/10.5089/9781451873122.001
Issue:
165
Series:
Working Paper No. 2009/165
Stock No:
WPIEA2009165
ISBN:
9781451873122
ISSN:
1018-5941

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