Ver Angola


Economist forecasts 1.2 percent recession in Angola this year

The Economist Intelligence Unit (EIU) has revised Angola's economic growth forecast downwards, now anticipating a 1.2 percent recession this year due to the country's falling oil production.


"Angola's immediate economic prospects remain weak, with the four-year recession continuing for another year in 2020," reads the periodic analysis of the country's economy.

In the report, sent to clients and to which Lusa had access, experts from the analysis unit of the British magazine The Economist write: "Oil production, estimated by the government at 1.389 million barrels per day in 2019, below the limit set by the Organization of Petroleum Exporting Countries of 1.481 million barrels per day, continues to fall due to the maturation of the fields and lack of investment in recent years.

"We expect oil production to continue to fall this year stealing this momentum, so we project that real GDP will contract by 1.2 percent, stealing the drop in exports and low oil revenues, which weigh on public spending while restrictive credit conditions limit investment and household consumption," they add.

For the next few years, however, the EIU already estimates a return to growth, anticipating an average expansion of 3.1 percent between 2021 and 2023, "motivated by the return to growth of the agriculture, mining, construction, manufacturing and services sectors, leveraged by improved monetary policy and government support to the non-oil economy.

For 2024, the EIU estimates that the Gross Domestic Product (GDP) will grow by 5.9 per cent due to the increase in oil production and the consequent impact on public finances and the Government's ability to stimulate economic activity.

Also in the chapter on economic forecasts, the EIU estimates an increase in inflation from 17.4 percent in 2019 to 21 percent this year, motivated by "the sustained weakness of the kwanza due to low oil exports and low availability of dollars, as well as the introduction of VAT and the reduction of electricity subsidies.

Still, the EIU concludes that in four years the value of inflation will have fallen to about half: "From 2021 a lower rate of depreciation of the kwanza will lead to a reduction in inflation, although the possible reduction of various subsidies will keep prices high, so we expect that average inflation will fall to 10.4 percent in 2024," conclude the analysts.

Angola's economy is facing negative growth since 2016, as a result of the significant drop in oil prices since the summer of 2014 and the consequent impact on public finances and the government's financial capacity to launch new projects to boost economic activity.

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