The GDP growth rate for MZ remains in contraction territory at -0.90% YoY for December 2025, unchanged from the September print. This marks the fourth consecutive quarter of negative growth, following sharper declines of -4.90% in February 2025 and -3.90% in July 2025. The economy has thus failed to rebound from the downturn that began in early 2025, contrasting sharply with the robust growth seen in 2023 and early 2024, when GDP growth peaked at 5.92% YoY in November 2023.

Drivers this month

• Weak domestic demand amid inflationary pressures
• Declining export volumes due to global trade disruptions
• Reduced investment spending in key sectors

Policy pulse

The current GDP contraction remains well below the central bank’s inflation-target-consistent growth range of 2.50% to 3.50%. Monetary policy remains tight, with the benchmark interest rate held at 7.50% to combat inflation near 8%. Fiscal stimulus has been limited, constrained by a government budget deficit of 4.20% of GDP.

Market lens

Immediate reaction: The MZN currency depreciated 0.80% against the USD within the first hour of the release, while the 2-year government bond yield rose 15 basis points, reflecting increased risk premia. Equity markets showed modest declines, with the MTZ index down 1.20%.

Core macroeconomic indicators underpin the subdued GDP growth. Inflation remains elevated at 7.80% YoY, eroding real incomes and consumer spending. Unemployment has risen to 9.40%, the highest since 2022, dampening household confidence. Industrial production contracted 2.30% YoY in November 2025, while retail sales declined 1.10% YoY.

Monetary Policy & Financial Conditions

The central bank’s hawkish stance aims to anchor inflation expectations but has tightened financial conditions. Credit growth slowed to 3.50% YoY from 5.20% six months ago. Lending rates remain elevated, limiting business expansion and consumer borrowing.

Fiscal Policy & Government Budget

The government’s fiscal deficit widened to 4.20% of GDP in Q3 2025, driven by lower tax revenues and higher social spending. Public investment projects have been delayed, reducing multiplier effects. Debt-to-GDP ratio stands at 62%, constraining further fiscal stimulus.

External Shocks & Geopolitical Risks

Global trade tensions and supply chain disruptions have hit MZ’s export-dependent sectors. Commodity price volatility, especially in energy and metals, has increased uncertainty. Regional geopolitical instability has also weighed on investor sentiment and foreign direct investment.

Market lens

Immediate reaction: The 2-year government bond yield spiked 15 basis points post-release, reflecting heightened risk aversion. The MZN/USD exchange rate weakened by 0.80%, while the MZNUSD pair saw increased volatility. Equity markets, including the MTZ index, declined modestly.

Looking ahead, MZ’s GDP growth trajectory faces multiple scenarios shaped by domestic and external factors. The baseline forecast projects a modest recovery to 0.50% YoY by mid-2026, contingent on easing inflation and improved global trade conditions.

Bullish scenario (20% probability)

• Global commodity prices stabilize, boosting exports
• Monetary easing in H2 2026 spurs credit growth
• Fiscal stimulus packages accelerate infrastructure spending
• GDP growth rebounds to 2.50% YoY by Q4 2026

Base scenario (55% probability)

• Inflation gradually declines but remains above target
• Monetary policy remains cautious, limiting credit expansion
• External demand recovers slowly amid geopolitical risks
• GDP growth stabilizes near 0.50% YoY through 2026

Bearish scenario (25% probability)

• Inflation persists above 8%, forcing further tightening
• Global trade tensions worsen, reducing exports
• Fiscal constraints limit government spending
• GDP contracts further, reaching -1.50% YoY by mid-2026

Structural & Long-Run Trends

Long-term challenges include low productivity growth, reliance on commodity exports, and limited diversification. Structural reforms in labor markets and investment climate are critical to reversing the stagnation trend. Demographic shifts and urbanization may provide growth opportunities if harnessed effectively.

MZ’s latest GDP growth data confirm a fragile economic environment marked by persistent contraction and subdued recovery prospects. The combination of tight monetary policy, fiscal constraints, and external shocks limits near-term upside. Policymakers face a delicate balancing act between controlling inflation and fostering growth. Market participants should monitor inflation trends, fiscal developments, and geopolitical risks closely.

Strategic investments in diversification and productivity-enhancing reforms remain vital for sustainable growth. The coming quarters will test the resilience of MZ’s economy amid a complex global backdrop.

Key Markets Likely to React to GDP Growth Rate YoY

The GDP growth rate in MZ is a critical indicator influencing multiple asset classes. Currency markets react swiftly to growth surprises, while bond yields adjust to changing inflation and fiscal outlooks. Equity indices tied to domestic economic activity also reflect shifts in growth expectations. Below are five tradable symbols historically correlated with MZ’s GDP growth dynamics:

• MTZ – MZ’s primary stock market index, sensitive to domestic economic conditions.
• MZNUSD – The national currency pair, reflecting macroeconomic sentiment and capital flows.
• BTCUSD – Bitcoin often serves as a risk barometer in emerging markets.
• EMZ – Emerging markets ETF with exposure to MZ, tracking regional growth trends.
• EURMZN – Euro to MZ currency pair, sensitive to trade and capital flows with Europe.

Indicator vs. MTZ Index Since 2020

Year	GDP Growth Rate YoY (%)	MTZ Index Annual Return (%)
2020	1.20	-8.50
2021	3.80	12.40
2022	4.50	15.10
2023	5.90	18.70
2024	3.70	7.30
2025	-0.90	-9.20

Insight: The MTZ index returns closely track GDP growth rates, with positive growth years correlating with strong equity performance. The 2025 contraction aligns with a notable market downturn, underscoring the sensitivity of equities to economic cycles.

FAQs

What does the latest GDP Growth Rate YoY for MZ indicate?

The latest GDP growth rate of -0.90% YoY indicates ongoing economic contraction and challenges in recovery.

How does the GDP Growth Rate YoY affect MZ’s monetary policy?

Persistent contraction pressures the central bank to balance inflation control with growth support, often leading to cautious policy adjustments.

Why is monitoring GDP Growth Rate YoY important for investors?

GDP growth signals economic health, influencing currency strength, bond yields, and equity market performance, guiding investment decisions.

Takeaway: MZ’s economy remains in a delicate phase of contraction with limited near-term growth prospects. Structural reforms and external conditions will be decisive for recovery.

Updated 12/4/25

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.