The second week of 2025 brought an economic panorama marked by challenges and opportunities, reflecting the dynamics of the financial market, the evolution of credit and the outlook for the country’s growth. The influence of the global situation, combined with domestic political instability and structural changes in the economy, dictates a start to the year of uncertainty and expectations for the coming months.
Financial rating agency Moody’s has highlighted the country as one of the emerging markets with growth potential in the energy sector, mainly due to gas exploration in the Rovuma basin. However, the country is still exposed to significant risks, namely political instability, environmental vulnerability and difficulties in managing foreign debt.
The return to the country of opposition leader Venâncio Mondlane has reignited political tensions, jeopardising investor confidence and increasing uncertainty about institutional stability. External indebtedness is also a critical factor, especially in a context of an appreciating dollar and additional fiscal pressures.
Deterioration in Business Activity
Standard Bank’s PMI index revealed a sharp drop in business activity, reaching the lowest level since the covid-19 pandemic. The indicator’s fall to 46.4 points in December reflects the impact of the strikes and protests related to the October electoral process. This situation severely affected demand for goods and services, leading to a reduction in orders, stocks and jobs.
The crisis in the supply chain was also a determining factor, with border closures limiting access to essential products and raising companies’ operating costs. Despite the challenging scenario, the study indicated that business costs fell for the second month running, while some companies showed a slight improvement in expectations for 2025.
Moderate Expansion of Credit to the Economy
The Bank of Mozambique announced that credit to the economy grew by 0.55 per cent in November 2024, reaching 290.9 billion meticals (4.5 billion dollars). The increase in financing to individuals and private companies shows the resilience of the banking sector, despite the macroeconomic challenges.
Interest rates for long-term and housing loans fell slightly, providing some relief to borrowers. However, the need for liquidity for productive investments remains a priority, requiring a prudent approach from the Bank of Mozambique in monetary regulation.
Decline in Foreign Direct Investment
Foreign Direct Investment (FDI) fell by 10.8% in the third quarter of 2024, totalling 947.9 million dollars (59.9 billion meticals). The downturn in foreign capital was influenced by increased political uncertainty and challenges in implementing structuring projects.
Despite this fall, the extractive industry remained the main destination for FDI, absorbing 905.3 million dollars (57.2 billion meticals). However, other sectors, such as manufacturing and tourism, recorded net capital outflows, reinforcing the need for greater diversification of the Mozambican economy.
Moody’s and other economic institutions maintain a cautiously optimistic stance on Mozambique. GDP growth for 2025 is estimated at 3.2 per cent, with significant risks associated with political instability, inflationary pressure and climate change.
The country’s ability to guarantee a stable business environment and implement sound economic reforms will be decisive in sustaining growth and attracting new investment.
Text: Felisberto Ruco
