After a five-year cycle of recession, the Angolan economy managed to return to growth last year, a period in which GDP rose 0.7%, according to preliminary data from Angola’s National Statistics Institute (INE). If this figure is confirmed, it is above the 0.1% growth estimated by the IMF in December, but is still lower than the 0.9% rise in GDP recorded in 2015, the last year of economic growth – followed by changes in -2.6% in 2016, -0.2% in 2017, -2.1% in 2018, -0.6% in 2019 and -5.2% in 2020. The sharp drop in the economy in 2020 is explained by the effects of the covid-19 pandemic, which was worsened by the fall in oil prices, a key raw material for the country’s wealth.
For this year, the International Monetary Fund (IMF) forecast is that the economy will grow 2.9%.
In the report released in January of this year, the IMF reiterated the importance of diversifying the Angolan economy through “deep and continuous structural reforms” to “achieve inclusive growth and consolidate economic sustainability”. “The rapid expansion of non-oil production requires the implementation of ongoing reforms to strengthen governance, improve the business environment and promote private investment and trade opening, as well as the development of human capital and infrastructure,” said the statement. institution. “The authorities must also promote the conditions for a faster development of the main economic sectors, such as agriculture, telecommunications and the financial sector”, he added.
According to the IMF, which recently finalized a program to support Luanda, the medium-term economic outlook is “favourable”, with “growth of around 4%” being forecast, driven by the non-oil sectors – the oil sector will continue stagnant. The forecast is that inflation, which has been at very high values, will begin to fall “gradually”. In January, according to a recent note from BPI, year-on-year inflation rose to 27.7%, which represented “the tenth consecutive month of rise and the highest value since July 2017”.
For the IMF, which prepared this report before the invasion of Ukraine (which worsened the prices of oil, but also of other raw materials imported by Luanda), the main risks to growth prospects “are the reversal of the recent recovery in the oil price, the resurgence of the pandemic (in the country or in the world) and a continuous decline in oil production”.
“A repeat of the severe weather would pose an additional risk to non-oil growth and disinflation. A lower-than-expected non-oil growth would pose a risk to the sustainability of public debt, which also depends on the continuation of budgetary discipline”, warns the IMF, not forgetting that this is a year of presidential elections (scheduled for August), with the successor of José Eduardo dos Santos, João Lourenço, to run for office again.
Angola has traditionally been one of Portugal’s major trading partners, with emphasis on its purchases of national products, but this position has been fading in recent years. Even so, sales of goods to Angola rose again in 2021, after falling for three years, reaching 952 million euros (9% more). Portugal was for many years Angola’s main supplier (especially agri-food goods and machinery), but lost its leadership to China (which is also Angola’s main customer, via oil).