Banco de Investimento Global (BiG) Mozambique has published a study pointing to moderate economic growth in the country, against a backdrop of high public indebtedness, foreign currency shortages, and a challenging business environment. Despite these constraints, institutional investors surveyed by the bank expect a gradual economic recovery over the coming years, with the energy sector standing out as one of the main drivers of growth, exports, and foreign exchange inflows.

According to the 4th edition of the Study on Institutional Investment in Mozambique, developed by BiG, 67% of participants consider the country's business environment unfavourable. Even so, 62% expect the activity of the institutions where they work to grow over the next year, reflecting confidence in their ability to expand despite the prevailing economic and financial difficulties.

Growth projections identified by the study remain moderate for 2026. Around 38% of investors surveyed by BiG forecast growth of between 0% and 2%, while an equal share admits the possibility of economic contraction. For 2027, expectations are more favourable: 48% of participants project growth of between 0% and 2%, while 38% anticipate expansion of between 2% and 4%, pointing to a gradual recovery in economic activity.

On inflation, 95% of study participants expect the rate to fall between 5% and 10% in 2026, while 81% forecast it will remain within that range in 2027. On the foreign exchange market, 95% anticipate that the metical will remain stable against the US dollar in 2026. The study also reveals that 57% of investors consider price pressures stemming from geopolitical tensions to be temporary, despite ongoing international uncertainties.

Public Debt and Energy Shape the Economic Outlook

Public indebtedness ranks among the main concerns identified in the BiG study, in a context where public debt is approaching 74% of gross domestic product (GDP). Around 71% of participants expect debt to increase in 2026, while 67% forecast a further rise in the public debt burden in 2027. For 2028, however, 81% anticipate a stabilisation or reduction in indebtedness, suggesting expectations of a gradual easing of pressure on public finances.

When asked by BiG about a possible restructuring of public debt, 62% of participants expressed a preference for solutions that do not impose losses on creditors. The result shows that investors prioritise the preservation of the value of debt securities and favour adjustment mechanisms that address the country's financial challenges without compromising their investments.

Despite concerns over indebtedness, the energy sector continues to be identified by study participants as central to the future of the Mozambican economy. Around 62% identify the sector as the primary driver for reducing the country's economic vulnerability, while 24% highlight the diversification of energy sources. However, 67% consider it unlikely that the Rovuma LNG liquefied natural gas project will reach a final investment decision in 2026.

The outlook for the external sector — encompassing Mozambique's trade and financial relations with other countries — also varies between the short and medium term. According to the BiG study, 71% of investors expect a reduction in exports in 2026, while 57% forecast a decline in international reserves. For 2027, expectations improve: 76% anticipate an increase in exports and 71% expect a recovery in international reserves. By 2028, the share projecting export growth rises to 81%, reflecting the importance attributed to large projects, particularly in the extractive sector.

Investors Favour Liquidity and Lower-Risk Instruments

The study results show that the institutions covered by BiG favour investments that preserve capital, generate returns, and maintain resources available to meet financial needs. Public debt represents 66.6% of the total assets under management of the institutions surveyed, underscoring the heavy concentration of investments in this segment of the domestic financial market.

Over the next 12 months, 57% of participants intend to increase investments in Treasury Bills, while 48% plan to raise amounts held in cash and demand deposits. A further 43% expect to increase exposure to Treasury Bonds. Conversely, 38% plan to reduce investments in term deposits, 33% anticipate a reduction in exposure to commercial paper, and 29% admit they may reduce assets denominated in foreign currency.

The preference for lower-risk instruments with greater liquidity is also reflected in decisions on the deployment of surplus liquidity — that is, available financial resources not required for immediate expenditure. According to the BiG study, 33% of participants would choose Treasury Bills, while 27% would opt for term deposits and 20% for medium-term financial instruments. A further 13% would retain resources in demand deposits, and only 7% would invest in equities, confirming a preference for fixed-income instruments and reduced exposure to equity market fluctuations.

In selecting investments, profitability is the most cited criterion, accounting for 20% of responses, followed by risk at 19% and liquidity at 17%. Together, the three factors represent 56% of the weighting attributed by participants. The study also reveals that 48% of investors do not use a formal benchmark to assess portfolio performance. Among those who do use specific reference points, 14% use Treasury Bill rates and another 14% use inflation.

Financial Risks and Monetary Policy Define the 2027 Horizon

The BiG study identifies public indebtedness, foreign currency shortages, and delays in the execution of large investment projects as among the principal risks to the Mozambican economy. These factors could limit economic growth and prolong the recovery, which depends in part on the materialisation of planned investments, particularly in the natural gas sector. The lack of foreign currency also hampers the payment of imports, the functioning of businesses, and the fulfilment of external financial obligations.

Regarding risks to institutional activity in 2026, 30% of participant responses point to market risk, associated with potential losses caused by fluctuations in the prices of financial assets. Liquidity risk ranks second at 29%, followed by technological risk at 13% and regulatory risk at 8%. These results help explain the preference for liquid assets and shorter-duration investments, which reduce exposure to market volatility and maintain resources available to meet financial commitments.

On monetary policy, 67% of participants consider the current stance of the Bank of Mozambique to be expansionary, associated with the interest rate-cutting cycle that began in 2024. For 2026, 86% expect the benchmark monetary policy rate — known as the MIMO rate — to remain unchanged. For 2027, however, the study points to the possibility of a more cautious posture, with potential interest rate increases should inflationary and exchange rate pressures warrant them. On sovereign risk, 81% of investors consider the probability of Mozambique improving its credit rating over the next 24 months to be moderate.

In summary, the BiG study results point to a gradual and uneven economic recovery in 2027, with expectations of moderate growth, inflation of between 5% and 10%, and continued pressure on public debt. Although investors expect a recovery in exports in the coming years, fiscal, exchange rate, and financial risks are likely to continue weighing on economic activity. In this context, participants assign the energy sector a central role in the country's growth trajectory.