Oxford Economics warned on Tuesday that international donors and investors may withdraw financial support to Mozambique if instability continues beyond the first quarter due to the “oppression” of the government.
“The greatest risk is that the protests will grow beyond the first quarter of this year if the opposition leader, Venâncio Mondlane, does not reach a compromise with the President-elect, Daniel Chapo,” wrote the analysts from the African department of this British consultancy in a note on the evolution of the index that measures business activity.
In this scenario, they add, “international donors and investors may respond to the government’s oppressive handling of the situation by withdrawing external funding,” which Mozambique depends on to balance the budget and finance economic development while it waits for revenues from the export of natural gas, mainly in the north of the country.
The economic impact of the violence of recent months “is difficult to estimate in real time, but there will certainly be impacts on trade, mining, production, transport and tourism” in the last quarter of 2024 and at the beginning of this year, say the analysts in their commentary on the evolution of the Mozambican economy, sent to investors and to which Lusa had access.
Last month, Oxford Economics had already lowered its forecast for the economy’s growth from 4.4% in 2024 to 4% and from 4.1% this year to 3.4%, precisely because of the crisis the country is going through.
The Purchasing Managers’ Index (PMI) of business activity in Mozambique suffered in December the “worst monthly contraction” since August 2020, due to the post-election tension in the country, according to Standard Bank, which conducted the survey.
“Mozambican private sector companies reported a further deterioration in their conditions in the final month of 2024, with output and order books again negatively affected by protests and strikes. Customer demand fell at the highest rate in four and a half years, causing further reductions in purchases, stocks and headcount,” reads the study, released today.
The document adds that the main PMI indicator fell another two points in December, falling “well into contraction territory” for the second month in a row, from 48.4 in November to 46.4 in December.
“The indicator signalled a solid deterioration in the health of the private sector,” it is emphasised, noting that the companies surveyed “widely indicated that the decline in operating conditions was due to the protests and strikes that followed the general election”.
“This instability had a considerable impact on the total volume of new orders, which fell in all monitored sectors, registering the biggest drop since June 2020,” it also adds.
PMI indicators above 50 points point to an improvement in business conditions compared to the previous month, while numbers below that figure show a deterioration.
The PMI (Purchasing Managers Index) indicator published monthly by Standard Bank is the result of responses from purchasing managers from a panel of around 400 private sector companies.
Clashes between police and demonstrators contesting the results of Mozambique’s general elections on October 9 have left almost 300 people dead and almost 600 shot, according to civil society organisations monitoring the process.
Since October, Mozambique has been experiencing the biggest protests since the first elections in 1994, with pro-Venâncio Mondlane demonstrators – a candidate who according to the CC obtained only 24% of the votes, but who claims victory – in protests demanding the ‘restoration of electoral truth’, with barricades, looting and clashes with the police.
