Mozambique: PMI index slips into 12-month low

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Mozambique: PMI index slips into 12-month low

9:10 CAT | 10 Feb 2023

Image: Lusa

The PMI index of Mozambican business activity fell to 48.2 in January, the lowest reading in 12 months, signalling a contraction in the economy, announced Standard Bank, which conducts the survey.

“This reflects month on month contractions in output, new orders, and stocks of purchases, which in general was accompanied by softer output and input prices [slipping into a 12-month low of 48.2 in Jan 23, from 50 in Dec 22],” said Fáusio Mussá, chief economist at Standard Bank Moçambique, in a comment that accompanies the index.

Having printed below the 50-benchmark level, the January PMI “suggests a contraction in economic growth compared with the previous month”.

This latest reading signalled “a modest deterioration in the health of the private sector economy, and the first since the Omicron COVID-19 wave in January 2022″.

“Clearly this economy is experiencing a softer aggregate demand in January on further monetary policy tightening to help fight inflation, which should see the recent increases in both local and foreign currency required reserves ratios translating into tighter liquidity conditions,” he added.

On a positive note, the drop in sales “helped firms to lower backlogs of work”, with the rate of depletion being “among the quickest for two-and-a-half years”.

In the same bulletin, Fáusio Mussá said that Standard Bank forecasts Mozambique’s GDP growth to “modestly rise to 4.2% y/y in 2023,” with annual inflation “easing towards 9.9% at the end of the year, from 10.9% y/y last December”.

The Standard Bank Mozambique PMI™ is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 400 private sector companies.