Mozambique Economic Outlook
The economy grew 4.7% year-on-year in Q2 (Q1: +4.2%), thanks to a marked acceleration in mining output more than offsetting a softer expansion in agricultural activity and a sharper decline in manufacturing production. Turning to the current quarter, available data points to healthy activity. The private sector PMI remained in expansionary terrain in July–August, matching Q2’s pace of growth. Moreover, inflation continued to decline in the same two-month period, which bodes well for household spending. In other news, in late August, Australian company Triton secured a 25-year mining concession for the Cobra Plains graphite deposit. This will provide a significant boost to the external sector, but production is unlikely to start before late 2024 at the earliest.
Inflation fell to an over two-year low of 4.9% in August from July’s 5.7%. The decline was driven by softer price pressures for food, housing and utilities, and transportation. Inflation is set to average lower this year relative to last, thanks to the normalization of global supply chains. That said, robust activity will keep inflation above the average of the last ten years.