Mozambique: Oxford Economics revises 2025 GDP growth to 1.8%

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Mozambique: Oxford Economics revises 2025 GDP growth to 1.8%

11:21 CAT | 09 Oct 2025

File photo: Oxford Economics

Consultancy Oxford Economics on Wednesday revised down its forecast for Mozambique’s economic growth this year, now projecting a 1.8% expansion in Gross Domestic Product (GDP), with economic activity remaining in negative territory.

“We now project that the economy will grow by a modest 1.8% in 2025, down from our previous forecast of 2.0%. This low-growth environment is likely to weaken private sector activity for the remainder of the year, despite a favourable monetary climate,” Oxford Economics analysts wrote in a commentary on the evolution of the Purchasing Managers’ Index (PMI), which tracks economic activity and business sentiment.

The analysts said the private sector “has struggled to regain momentum in 2025 after post-election turmoil hampered economic activity in the fourth quarter of 2024,” when the economy slipped into recession following violence that erupted after the announcement of election results.

“Brief periods of private sector expansion have been continually interrupted by intermittent contractions as the economy struggles to stabilise,” they noted, adding that the average PMI for the first nine months of the year stands at 49.7 points, below the 50-point threshold that separates growth from contraction.

Inflation is expected to moderate to 4.5% this year, supported by a stable outlook for single-digit inflation, partly driven by lower interest rates, Oxford Economics said. However, it warned that “foreign exchange liquidity problems, weak business confidence, damaged infrastructure and the delayed financial effects of social unrest will weigh on business activity, and PMI indices are expected to hover around the 50-point mark in the coming months.”

Mozambique’s economic activity deteriorated again in September, with companies reporting their first decline in sales in three months, according to the PMI released on Friday by Standard Bank, which acknowledged that the country’s economy has entered recession.

Quoted in the report, Standard Bank’s chief economist, Fáusio Mussá, described September as “another month of weak performance for the private sector economy,” noting that Mozambique recorded year-on-year GDP contractions between the last quarter of 2024 and the second quarter of 2025, “which indicates a slow recovery from the impact of post-election turmoil.”

“We would not be surprised if GDP data for the third quarter of 2025 showed that the economy remains in recession. Our forecasts indicate that it will emerge from recession in the fourth quarter of 2025, supported mainly by favourable base effects,” Mussá said.

The PMI rose from 49.1 in June to 50.7 in July, entering positive territory, but fell back to 49.9 in August and 49.4 in September.

PMI readings above 50 indicate an improvement in business conditions compared with the previous month, while those below 50 signal a deterioration.

Source: Lusa