Consultancy Oxford Economics forecasts Mozambique’s economy will slow growth to 4.6% this year due to weakening business confidence and delays in restarting projects in Cabo Delgado.
“Business people in Mozambique are feeling less confident about the future of economic activity as a natural gas exploration project in northern Mozambique remains closed and faces further possible delays,” wrote analysts at Oxford Economics Africa.
Commenting on business confidence, which fell into negative territory in March for the fourth time in five months, analysts said that “economic growth is expected to slow from 5% in 2023 to 4.6% this year due to a slowdown in growth in natural gas production and delays in the construction of the TotalEnergies project.”
The latest PMI data, which measures business confidence in the country’s economic development, “does not indicate a sharp slowdown in economic growth, but in fact shows that business conditions are not significantly improving and that business confidence has somehow weakened.”
Oxford Economics’ forecast sees TotalEnergies returning to Mozambique “early in the second half of the year”, taking advantage of the extended presence of Rwandan troops in northern Mozambique to ensure greater security as construction work resumes on a mega-project to explore the Portuguese-speaking African country’s vast natural gas reserves.
Mozambique’s PMI fell into negative territory in March for the fourth time in five months, signaling “weak economic activity”, Standard Bank said in April.
The index rose in February (50.7 points) for the first time in five months, recording its highest gain since July 2023, but returned to negative territory in March (49.7 points).
Fauzio Mussa, chief economist at Standard Bank Mozambique, was quoted in the study as saying that “March’s PMI signals weak economic activity at the end of the first quarter of this year, with contraction in the manufacturing and trade sectors, but with agriculture and services expected to expand overall.”
Presenting the figures, Fausio Mussa also said that “the sub-index of future expectations remained in positive territory, but recorded a decline to a six-month low in March, indicating recurrent climate events as well as delays in implementation.” liquefied natural gas (LNG) projects in Cabo Delgado have impacted business confidence.”
The Purchasing Managers’ Index (PMI), published monthly by Standard Bank, is the result of responses from purchasing managers from a group of about 400 private sector companies.
Mozambique has three development projects approved to explore natural gas reserves in the Rovuma Basin, considered one of the world’s largest, off the coast of Cabo Delgado.
Two of these projects are larger and plan to send gas from the seabed to land, cool it in a plant and export it by sea in a liquid state.
One of them is led by TotalEnergies (the “Zone 1” consortium) and work continued until it was suspended indefinitely following the armed attack on Palma in March 2021, when the French energy company said it would only resume work when the area will be safe.
The other is a yet-to-be-announced investment led by ExxonMobil and Eni (the Area 4 consortium).
The third completed smaller project also belongs to the Zone 4 consortium and is a floating platform to collect and process gas for export directly to the sea, which began implementation in November 2022.
Author: Lusa
Source: CM Jornal
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