Mozambique Economy To Grow 6.5 Pct In 2008 - IMF

Headline inflation at the end of 2008 is now projected to exceed 10 percent.

Mozambique's economy will expand by 6.5 percent in 2008, the International Monetary Fund (IMF) forecast on Thursday, lower than the government target of 8 percent growth.

The IMF said Mozambique's overall performance was satisfactory, although higher international food and fuel prices had added to inflation. "Economic growth for 2008 is projected to slow to 6.5 percent from 7.0 percent in 2007," it said in a statement.

"Headline inflation at the end of 2008 is now projected to exceed 10 percent. Core inflation, which excludes food and energy items, is contained at below 4 percent."

According to the government, the economy grew by an annual 6.7 percent in the first half of the year, while inflation averaged 10.4 percent, up from 7.5 percent in 2007.

The southern African country was one of the poorest nations in the world at the end of a 17-year civil war in 1992 but has had one of the fastest growing economies in the region over the past decade.

However, it still relies heavily on donor aid to fund expansion and poverty remain widespread.

Mozambique's government had forecast 8 percent growth for this year, buoyed by increased investment in agriculture and tourism, and despite severe floods that hit the central and northern regions earlier in 2008.

The IMF said the outlook for 2009 was good but warned of a risk of lower exports due to a global economic slowdown.

"The outlook for 2009 remains robust," it said.