The week brought new signs of economic fragility in Mozambique, with the National Institute of Statistics (INE) confirming four consecutive quarters of recession and the World Bank warning that the country leads global rankings in external debt interest burdens relative to exports and Gross National Income (GNI). On the other hand, the Standard Bank PMI index remained above the 50-point threshold in November, suggesting some business dynamism, while credit to the economy approached historical highs again in September.
GDP Falls 1.89%, and the Country Completes a Year of Recession
The INE confirmed that the Mozambican economy contracted by 1.89% in the first nine months of 2025, marking four consecutive quarters of negative growth. In the third quarter, Gross Domestic Product fell by 0.85% year-on-year, extending the recessionary trajectory that began in the last quarter of 2024. The greatest pressure came from the secondary sector, which declined by 10.63%, penalized by a sharp drop in electricity, gas, and water production and distribution (-31.39%) and in manufacturing (-4.08%). The tertiary sector also posted negative performance (-1.51%), affected by declines in hotels and restaurants (-6.12%), trade and repair (-5.20%), and transport and communications (-3.30%). Only financial services showed growth (1.47%).
The government revised its economic growth forecast for 2025 downward, from 2.9% to 1.6%, and announced cuts to non-priority investment projects. For 2026, growth is projected at 2.8%, supported by the dynamism of services, agriculture, liquefied natural gas exports, and strategic investments in the energy sector.
Mozambique Tops Global Rankings for Countries Paying the Most Interest Relative to Exports
The International Debt Report, published this week by the World Bank, placed Mozambique at the top of the global ranking of countries that paid the highest external debt interest relative to export revenues in 2023 and 2024. The country also ranks among the economies with the highest debt burden relative to GNI, revealing a structural imbalance between the real economy and external financial obligations.
According to the report, between 2022 and 2024, developing countries paid around 49.4 billion meticais in interest and amortizations — an amount higher than the new financing received — marking the largest net deficit in over half a century. The World Bank warns that, despite a slight improvement in international financial conditions, low-income countries “are not out of danger,” emphasizing that debt accumulation continues to rise and requires prudence in budget management.
Mozambique is among the 78 countries eligible for financing from the International Development Association (IDA), whose combined debt reached 80.1 billion meticais last year. Interest payments absorbed 27.6 billion meticais in 2024, considered disproportionate given urgent social needs such as education, primary healthcare, and infrastructure. Conversely, the World Bank channeled, in 2024 alone, 1.2 billion meticais more than it received in payments and interest, in addition to 500 million meticais in grants.
PMI Remains Above 50 Points as Business Activity Gains Momentum
Despite the recessionary macroeconomic environment, the Standard Bank PMI index remained in positive territory for the second consecutive month, reaching 50.8 points in November. The indicator reflects improvements in production, new orders, and employment, amid higher demand and the launch of new products in the market.
New orders grew at the fastest pace in the last 17 months, and job creation reached its highest level since July 2024. However, companies continued to exercise caution in inventory management, reducing stocks for the seventh consecutive month.
Fáusio Mussá, Chief Economist at Standard Bank Mozambique, warned that a possible suspension of Mozal operations in 2026 remains a significant risk, with potential negative impacts on public finances, economic growth, and foreign exchange availability.
Credit to the Economy Approaches Historic Highs
Credit to the economy grew again in September, approaching a new multi-year high. The total stock reached approximately 292.4 billion meticais, a 1% increase compared to September 2024 and very close to the peak of 292.8 billion recorded in May of this year.
Credit to households remained the main driver, amounting to 101.1 billion meticais, demonstrating continued demand for financing from families. This was followed by trade (24.8 billion meticais), transport and communications (24.9 billion meticais), and manufacturing (21.7 billion meticais).
The Mozambican Banking Association announced a reduction of the prime rate to 15.80% in December, after successive cuts throughout 2024. However, Governor Rogério Zandamela once again warned of the worsening domestic public debt, a factor affecting the normal functioning of the financial market and requiring measures to reinforce economic stability and inflation control.
Text by Felisberto Ruco
