"We revised our Gross Domestic Product growth forecast from 0.6 percent to 1 percent, following better-than-expected results in the third quarter of 2023, which proved the resilience of the non-oil economy", write BMI Research analysts on updating the macroeconomic scenario for Angola.
In the document entitled "Angola's growth will remain weak due to the drop in oil production and high inflation", sent to investors and to which Lusa had access, the analysts from this consultancy, owned by the same owners of the financial rating agency Fitch Ratings, write that, despite the upward revision, "the estimate of a weakening in consumption remains and exports are expected to fall further in 2024, canceling out the strong foreign investment".
In its forecasts, BMI Research sees GDP accelerating slightly, following a slowdown in inflation, but highlights that falls in oil exports will keep GDP growth below the average between 2010 and 2014, at 5.3 percent.
The economic growth in the third quarter was supported by mining activity, which grew 41.7 percent and added 1.1 percentage points to GDP growth, in contrast to the 0.4 percent drop in oil production in the third quarter which BMI Research says is "a modest improvement on the 2.9 percent contraction recorded in the second quarter" of last year.
"In 2024, we expect that oil exports will fall less sharply than in 2023, and that foreign investment will strengthen, but consumption will remain under pressure, keeping growth below the average of 5.3 percent recorded between 2010 and 2014", the year of the oil shock that threw Angola into a five-year recession.
This year's growth will be sustained by increased foreign investment, particularly in the oil and gas sector, but also in the energy and mining sectors.
Private consumption, on the contrary, will continue to be pressured by inflation, which BMI Research sees increasing from 13.6 percent in 2023 to 17.5 percent this year due to the impact of rising fuel prices and the strong depreciation of the kwanza in the middle of last year, "which nullifies the purchasing power of families", in addition to the forecast of a difficult year in terms of weather, affecting harvests.
"Thus, we expect private consumption growth to slow down, from an estimated 1.4 percent in 2023, to 1.1 percent this year, resulting in a contribution of 0.5 percentage points to GDP growth", write the analysts.
With oil exports falling due to the contraction in oil production, still smaller compared to the drop predicted last year, BMI concludes that "net exports are expected to fall 15.6 percent, taking 0.5 percentage points off the growth of the GDP".
For 2025, the outlook is for GDP to accelerate to 1.4 percent, "still below growth potential", with inflation falling to 12.3 percent and the National Bank of Angola cutting the interest rate director to 17 percent, which will favor the growth of credit granting and private consumption.
