Commenting on business confidence figures which fell back into negative territory in March for the fourth time in five months, the analysts note that “growth is set to moderate from 5.0% in 2023 to 4.6% this year due to lower natural gas production and delays to TotalEnergies’ project”.

The latest Purchasing Managers’ Index (PMI) figures, which gauge business confidence in the direction of a country’s economy, “do not point to an imminent sharp slowdown in economic growth, but rather that business conditions are not improving materially and that sentiment has weakened somewhat”.

Oxford Economics expects TotalEnergies to return to Mozambique “early in the second half of the year”, helped by the extension of the deployment of Rwandan troops to northern Mozambique to provide security for the resumption of construction work on the mega-project to exploit the country’s vast natural gas reserves.

The Mozambique Business Activity PMI fell back into negative territory in March for the fourth time in five months, signalling “a contraction in business activity”, Standard Bank said in April.

The index had risen in February (50.7 points), the first increase in five months and the strongest since July 2023, but fell back below the 50.0 no-change mark in March (49.7 points).

Standard Bank Mozambique’s chief economist, Fáusio Mussá, was quoted in the study as saying that “the March PMI signals a contraction in business activity at the end of the first quarter of this year, with the manufacturing and trade sectors contracting, while agriculture and services expanded”.

Presenting the figures, Mussá also said that “the future expectations sub-index remained in positive territory but fell to a six-month low in March, suggesting that ongoing weather events and delays in the implementation of liquefied natural gas (LNG) projects in Cabo Delgado are weighing on business sentiment”.

The Purchasing Managers Index (PMI) is a monthly survey of private sector companies’ purchasing managers, conducted by Standard Bank.

Mozambique has three approved gas projects to exploit the natural gas reserves in the Rovuma Basin, estimated to be among the world’s largest, off the coast of Cabo Delgado.

Two of these are large-scale projects that involve piping the gas from the seabed to land, cooling it at an onshore plant and exporting it by ship in liquid form.

One is led by TotalEnergies (Area 1 consortium) and work was suspended indefinitely after an armed attack on Palma in March 2021, with the French energy company saying it would only resume when the area was safe.

The other is the yet-to-be-announced investment led by ExxonMobil and Eni (Area 4 consortium).

A third, smaller project, also by the Area 4 consortium, involves a floating platform to extract and process the gas for export directly at sea, and started production in November 2022.

Read Also: Consultora prevê que 'rating' de Moçambique continue no grau de "lixo" (Portuguese version)

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