Mozambique's economy experienced its largest contraction in at least seven years during the fourth quarter, as post-election protests disrupted business activities, the National Statistics Institute reportedly has said in an emailed statement.
The GDP fell by 4.9% in the three months ending in December compared to the same period the previous year, which marks a sharp reversal from the previous quarter's 3.7% growth and exceeds the economic slump seen during the peak of the COVID-19 pandemic in 2020.
The downturn was driven by widespread post-election protests following the contentious October 9 vote, which disrupted business activity and strained government revenues.
These challenges have further exacerbated Mozambique’s existing debt problems, prompting S&P Global Ratings to downgrade the country’s local currency credit rating to CCC-, signaling a high risk of default.
To address imminent maturities on local currency securities this year, the government is reportedly set to engage with commercial lenders for discussions on a potential swap auction. If this process resembles a distressed debt exchange, S&P may reclassify Mozambique’s credit status to "SD" (selective default).