London, Sept. 28, 2026 (Lusa) - The credit rating agency Standard & Poor's (S&P) has downgraded its growth forecast for Mozambique's economy to 0.7% this year due to a shortage of US dollars, tight financing conditions and weak private investment.
«We have revised down our forecast for real GDP growth to 0.7% in 2026, reflecting the ongoing shortage of US dollars, restrictive financing conditions and weak private investment, which are holding back the manufacturing, construction and import-related sectors,» writes S&P.
In the note accompanying the decision to downgrade the external debt rating to CCC, two notches above Financial Default, and in which it forecasts growth of 2.5% in 2027, S&P emphasises that «the agricultural sector, which accounts for around 30% of GDP, is also expected to remain under pressure following the severe flooding and heavy rainfall recorded in the first half of 2026, the adverse weather conditions linked to the El Niño phenomenon in the second half of the year, and disruptions to fertiliser supplies from the Middle East resulting from conflicts».
Furthermore, they add, the closure of Mozal's aluminium smelter, whose output accounts for around 2% of GDP and 20% of goods exports, is expected to place even greater emphasis on fostering economic growth and enhancing the availability of foreign exchange in this Portuguese-speaking African country.
«Mozambique's fiscal position remains fragile, against a backdrop of mounting pressures on expenditure,» says S&P, noting that between 2021 and 2025, «expenditure on the wage bill, together with benefits and pensions, rose by more than 50% to 242 billion meticais», equivalent to around €3.3 billion, accounting for 16% of GDP, and consumed around 70% of total government revenue.
On the other hand, «tax collection fell short of expectations due to persistent challenges in the private sector, including restrictive financing conditions and limited availability of foreign exchange», which directly affected liquidity and the ability to service domestic debt.
In its analysis of the country's economy, S&P also notes that inflation is expected to reach 6.1% in 2026, «an increase from the 4.4% recorded in 2025, as higher fuel prices and less favourable agricultural conditions more than offset the moderating effects of subdued domestic demand and relative exchange rate stability».
Regarding the metical, analysts at the rating agency note that the IMF considers the national currency overvalued by around 15%.
«Securing a new IMF programme will, in our view, likely require a firm commitment to greater exchange rate flexibility; we forecast a modest depreciation of the Mozambican metical through to 2029, given the reported foreign exchange shortages, but the currency will continue to receive artificial support from certain exchange controls implemented by the central bank,» they concluded.
MBA/ADB // ADB.
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