Standard Bank’s Q2’25 outlook for Mozambique

Mozambique's private sector has shown positive signs of growth in April, with the Standard Bank Purchasing Managers' Index (PMI) rising to 50.5 for the third consecutive month, indicating expansion. This uptick is attributed to increased new business activities and improvements in supply chains, reflecting a sense of cautious optimism among businesses navigating post-election uncertainties. To gain a deeper insight into Mozambique's economic prospects for the second quarter of 2025, Celio Hamide, Head of Sales for Global Markets at Standard Bank Group, shared valuable perspectives in a recent interview. As 2025 commenced, Mozambique witnessed a shift from negative territory due to civil unrest to a more positive trajectory, albeit not at the expected pace. Hamide highlighted the growth in the private sector concerning new orders, purchases, and timely supply deliveries, outlining an overall promising outlook from the market's standpoint. Exploring the key drivers behind the improved business activity in the second quarter of 2025, Hamide emphasized the economic targets set by the government, including a 2.9% GDP growth rate and an inflation rate of around 7%. Particularly noteworthy was the significant progress in the agriculture sector, with notable exports of tobacco and cashew nuts contributing to the country's revenue. Additionally, the focus on oil and gas projects, such as Total Energy's commitment to support and uplift operations, is anticipated to bring about substantial economic growth. Global developments, especially concerning trade policies, remain a crucial consideration for Mozambique's economic landscape. Hamide acknowledged the potential impact of US tariffs and softer growth trends in China, echoing the importance of monitoring commodity prices like coal and aluminum that significantly influence the country's trade balance. As a result, any fluctuations in these prices could have ripple effects on Mozambique's economy. Looking ahead to the upcoming monetary policy decisions in Mozambique, Hamide predicted a further easing of policies to continue supporting economic recovery. With the Monetary Policy Committee (MPC) meeting scheduled for the end of May, a rate cut ranging between 25 to 50 basis points is anticipated. Moreover, initiatives by the central bank to enhance forex market liquidity through increased requirements for export proceeds conversion and fuel re-export regulations highlight a proactive approach to stabilize the market. Addressing the inflation forecast for 2025, Hamide projected a modest increase to around 6.1%, citing factors like US tariffs and fuel prices as potential influencers. With a historical trend of inflation peaking between April and July, efforts to maintain stable oil prices could aid in curbing inflation rates within the targeted range by year-end. In conclusion, Standard Bank's outlook for Mozambique in the second quarter of 2025 reflects cautious optimism amidst evolving economic dynamics. The concerted efforts to stimulate growth in key sectors, manage global trade uncertainties, and implement strategic monetary policies position Mozambique's economy on a trajectory of resilience and adaptability.