Mozambique's Economy Shrunk Most in Seven Years on Vote Unrest
(Bloomberg) -- Mozambique's economy contracted the most in at least seven years in the fourth quarter, after post-election protests shuttered business activity.
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Gross domestic product declined 4.9% in the three months through December from a year earlier, compared with a 3.7% rise in the prior quarter, the National Statistics Institute said in an emailed statement Thursday. The slump was even bigger than one at the height of the Covid-19 pandemic in 2020.
Months of deadly protests shook Mozambique's economy last year in the wake of a disputed Oct. 9 vote that extended the ruling party's five decades in power. The unrest hit government revenue, compounded a growing debt problem, and prompted S&P Global Ratings to downgrade the nation's long-term local currency credit to CCC- on Wednesday.
Mozambique was among Africa's fastest-growing economies until a decade ago, when a $2 billion debt scandal tipped it into crisis that ended in default. An Islamic State-linked insurgency has also weighed on economic activity and delayed nearly $50 billion in natural-gas export projects from companies including TotalEnergies SE and ExxonMobil Corp.
While Mozambique's post-election unrest has largely subsided, sporadic demonstrations continue in a fragile socioeconomic environment, S&P said, adding that the risk of a distressed domestic debt exchange is elevated.
The ratings company said it understood that the government will soon meet commercial lenders to discuss the terms of a swap auction on local currency securities maturing this year. That could lead to S&P assessing the credit as 'SD' — or selective default — if it's akin to a distressed debt exchange, the company said.
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