IMF Warns of Stagnation for Mozambique’s Economy
Mozambique’s economy is expected to remain in a state of near-stagnation this year, with the International Monetary Fund (IMF) forecasting a meager 0.5% growth rate. The sluggish performance follows a recession in 2025, as the nation grapples with biting foreign exchange shortages and heightened geopolitical instability.
António David, deputy head of the IMF’s African department regional studies division, told Lusa that the outlook remains fragile. “Last year already saw negative growth, and we project that high uncertainty and the scarcity of foreign currency will continue to weaken economic activity in Mozambique,” David stated during the IMF and World Bank Annual Meetings in Washington.
Geopolitical Shocks and Fiscal Pressures
The economist highlighted that while Mozambique looks forward to massive natural gas projects stimulating the economy toward the end of the decade, the immediate future is clouded by the conflict in the Middle East. As a net oil importer, Mozambique is particularly vulnerable to the supply shocks and rising costs triggered by the crisis, which are expected to dampen growth prospects well into 2026.
While David praised Mozambican authorities for successfully keeping inflation below 5%, he warned of “very acute budgetary pressures.” He noted that government revenue collection is being undermined by tax exemptions within special regimes, making it difficult to balance the books.
A Call for Structural Reform
With significant revenues from natural gas exploration still years away, the IMF urged the government to act decisively. According to David, the administration must prioritize putting fiscal policy on a sustainable path, reducing burgeoning public debt, and stabilizing the economy to increase the availability of foreign currency for the private sector.
Regional Outlook: A Mixed Bag
The IMF’s World Economic Outlook projects that growth across sub-Saharan Africa will remain relatively stable, averaging 4.3% in 2026 and 4.4% in 2027. However, performance varies wildly across the continent’s Portuguese-speaking nations:
- Angola: Expected to grow by 2.3% this year and 2.6% in 2027, trailing the regional average despite recent stabilization efforts.
- Cape Verde & Guinea-Bissau: Both nations are poised for robust expansions of 5%.
- Equatorial Guinea: The country remains mired in a decade-long crisis, with GDP projected to contract by 2.7% in 2026 and 1.3% in 2027.
Global Uncertainty Clouds the Horizon
The sluggishness in Mozambique reflects a broader global slowdown. The IMF has revised its 2026 global growth forecast downward from 3.3% to 3.1%, citing the ripple effects of the Middle East conflict. IMF economists noted that prior to the war, they had intended to revise global forecasts upward; instead, the conflict has forced a 0.2 percentage point cut, leaving the world economy on a slower trajectory than the 3.4% growth seen in 2024–2025.
Image: Pexels – Renan Braz
