An Assessment of External Price Competitiveness for Mozambique
IMF Working Papers, August 1, 2009
Source details
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- An Assessment of External Price Competitiveness for Mozambique
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Bibliographic details
- Authors: Francis Vitek
- Published: August 1, 2009
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451873122.001
Summary and key finding
- 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.
- 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.
Exchange rate assessment
- The metical is assessed as overvalued by 26 to 41 percent in real effective terms.
- Loss of external price competitiveness is supported by a variety of indicators (unspecified individual indicators are referenced collectively in the source).
Policy implications and recommendations
- An overvaluation of the metical of the magnitude indicated has the potential to:
- Retard economic growth.
- Jeopardize external stability.
- The paper calls for an adjustment of monetary policy to gradually restore external price competitiveness.
Subject and keywords
- 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
Source: An Assessment of External Price Competitiveness for Mozambique (IMF Working Paper No. 2009/165).