This Systematic Country Diagnostic (SCD)is designed to assess the key constraints and opportunitiesfacing Mozambique as it strives to sustain robust growth andmacroeconomic stability while accelerating poverty reductionand promoting greater economic inclusiveness. The SCD isorganized into six chapters. Chapter two describes theevolution of poverty and inequality, explores their regionaland demographic dimensions, and identifies strategies foraccelerating poverty reduction. Chapter three analyzes keyeconomic constraints and opportunities, identifying thedrivers of recent growth, describing developments in thereal sector and assessing emerging challenges associatedwith the rise of the extractive industries. Chapter fourexamines the inclusiveness of growth, presenting an in-depthanalysis of the labor market, the social sectors and theongoing urbanization process. Chapter five discusses fiscal,institutional, political, social and environmental risks tothe sustainability of growth and poverty reduction. Chaptersix completes the analysis by identifying a set of priorityobjectives for accelerating progress on the World Bank’stwin goals of eliminating extreme poverty and promotingshared prosperity.