Bank of Mozambique expects further economic decline in Q!, albeit at slower pace

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Bank of Mozambique expects further economic decline in Q!, albeit at slower pace

1:48 CAT | 10 Apr 2025

File photo: Banco de Moçambique

The Bank of Mozambique estimates that the country’s economy contracted again in the first quarter of the year, due to post-election social unrest, but at a slower pace, and expects a recovery in the coming quarters.

“A gradual recovery in economic activity is expected to resume in the second quarter,” the central bank’s latest Economic Situation and Inflation Outlook Report states.

“In the first quarter of 2025, excluding LNG [liquefied natural gas] production, real GDP is expected to continue to fall, but at a slower pace, reflecting the conditioned functioning of the economy, due to the destruction of various infrastructures during the post-election tension and the impact of climate shocks,” the document reads.

“With regard to economic activity, excluding the LNG sector, moderate economic growth is expected, reflecting, above all, the performance of the primary (agriculture and coal) and tertiary (services) sectors, supported by the gradual restoration of production and logistics capacity, despite the uncertainties regarding the impacts of climate shocks on agricultural production and various infrastructures, and the effects of post-election tension on the sectors of activity,” it concludes.

The Mozambican economy fell by 4.87% year-on-year in the fourth quarter of 2024 alone, a period marked by strong post-election protests in the country, according to government data.

“Gross domestic product at market prices showed a negative variation of 4.87% in the fourth quarter of 2024, when compared to the same period in 2023,” reads last year’s Ministry of Finance budget execution report.

The Mozambican economy grew by just 1.9% in 2024, almost a third less than expected, due to the impact of the post-election demonstrations and protests in the country, Finance Minister Carla Loveira said at the end of February this year.

“These violent actions against public and private assets had a negative impact on the economic growth rate, which stood at 1.9% in 2024, compared to the 5.5% that had been planned for this year, 2024, and 5.4% observed in the same period in 2023,” the minister said in Maputo at an event announcing the measures for economic recovery for the Mozambican business sector, in the context of the social unrest that followed the general elections in October.

The finance minister added at the time that this trend “was also aggravated by the impact of climate shocks, particularly Severe Tropical Storm Filipo”, which caused heavy rains and floods in some cities and towns, especially in the south, and by the effects of the ‘El Niño’ phenomenon, which affected the productive sector in some regions of the country.

Mozambique experienced a climate of social unrest for almost five months after the general elections of October 9, aggravated by the announcement of the voting results, with demonstrations, street protests, barricades, roadblocks, vandalism and destruction of public facilities and businesses, looting and clashes with the police that caused more than 360 deaths.

The Mozambican government estimated that the country’s GDP should grow to 1.536 trillion meticais (around €23 billion) in 2024, which would correspond to an increase, in percentage terms, of 5.5%.

The governor of the Bank of Mozambique, Rogério Zandamela, admitted at the end of January that the first quarter of this year was “almost lost” in terms of economic growth, also due to the prevailing post-election social unrest, foreseeing modest growth for 2025.

He then added that “at best” Mozambique should record “zero or probably negative growth” until March. “From the second quarter onwards, our expectation is that the economy will start to grow and, for the year as a whole, we forecast (…) modest growth,” he acknowledged, although stressing that performance remained dependent on the implementation of structural reforms in the country.

Source: Lusa