IMF expresses optimism about Mozambique’s medium-term economic prospects

The international Monetary Fund (IMF) has predicted that despite the challenges facing Mozambique, it remains cautiously optimistic about Mozambique’s medium-term economic prospects.

According to Manufacturing Global News Bulletin – January 2025 Edition, Mozambique’s post-election unrest and the devastation caused by Cyclone Chido is reportedly said to have severely impacted the country’s business environment, trade activities, and manufacturing sector.

In addition, the politically motivated protests have further fueled chaos as more than 300 people have been killed, hundreds of businesses looted and groups of vigilantes are terrorising neighbourhoods.

“In December, over 1,500 inmates escaped from a prison in Maputo. Key sectors such as trade, transportation and services have been hit particularly hard and 1,200 jobs have been lost according to a local report.

“One of the sectors hit hardest is mining, a critical pillar of Mozambique’s economy. However, the manufacturing sector too has faced challenges due to the ongoing instability in the country.

“Many businesses in Mozambique are currently on edge due to unsteady access to raw materials, and disruptions in trade routes and supply chains hurting production and distribution networks. “The heightened security risks associated with the unrest have caused many manufacturers to scale back operations, affecting both output and employment in the sector.

“The local business environment has been further affected by the uncertainty surrounding government policies, particularly regarding new government leadership following the political transition. This lack of clarity has slowed investment in the manufacturing industry, with many businesses taking a wait-and-see approach until the political situation stabilizes,” the report read.

According to Olamide Harrison, the IMF’s resident representative for Mozambique, while growth slowed from 4.5% in the second quarter to 3.7% in the third quarter of 2024, the country may experience a modest recovery in 2025, once the political transition and the impact of the cyclone have been addressed.