Mozambique Economic Outlook
Economic growth should have slowed in Q1 due to Cyclone Freddy: Storms and floods affected over a million people, damaging croplands, transportation infrastructure and the power grid. Turning to Q2, April data suggests that the economy is recovering from the cataclysm: The PMI rose to a nine-month high, while inflation ticked down. Shifting to the all-important gas sector, in late April, Italian energy company Eni started exploring the Angoche basin and is now considering building a floating platform in the area, which would significantly boost the economy ahead. Later, in early May, Prime Minister Kishida said that Japan will encourage investment in Mozambican gas projects and promised financial support to counter terrorism; conflict with jihadists is the main roadblock for the country’s gas sector.
Inflation declined to 9.6% in April from 10.8% in March. The print was chiefly driven by smaller increases in prices for transportation and food and non-alcoholic beverages. This slowdown likely reflects that distortions stemming from Cyclone Freddy are easing. Our panelists see inflation declining further in the coming months.