Standard Bank’s Purchasing Managers Index™ (PMI™) revealed that the conditions of Mozambican companies showed a slight improvement in September, noting that growth in production continued to slow, resulting in a smaller increase in employment and a slight rise in inventories.
According to the Monthly Report issued by the bank and consulted by DE on Monday, October 9, despite the reduction in pressure on costs, companies made further cuts in their purchasing activity, in a context marked by a reduction in sales.
According to the document, the volume of new orders continued to increase in September as, on average, companies reported greater demand from customers, but as was the case in August, the rate of expansion was only slight.
“Production growth levels continue to slow down due to the low demand scenario. Of the five sectors analyzed, only services and wholesale and retail trade saw an increase in activity. On the other hand, production fell in the agricultural and construction sectors, while the industrial sector saw no change,” says the report.
However, the PMI adds that Mozambican companies continued to keep up with their workloads during September.
Commenting on the data, Standard Bank’s chief economist, Fausio Mussá, noted that, looking at the macroeconomic context, the current account deficit of the balance of payments stood at 26.5% of Gross Domestic Product (GDP), a reduction compared to the same period last year when it was 29.8%.
“There was also a further drop in the ratio of the state wage bill to revenue to 53.5%, as opposed to 69.3% in 2022,” he said.
For the economist, “these developments, combined with the slowdown in inflation, with the most recent figure of 4.9% in August, after a peak of 13% in 2022, suggest that the Bank of Mozambique (BdM) may start to consider cutting interest rates,” he said.
“We predict a further slowdown in inflation to 4.8% by the end of the year. For the economy as a whole, we forecast an acceleration in GDP growth to 5.1% in 2024, supported by investment in Liquefied Natural Gas (LNG),” he concluded.
