Ver Angola


Fitch Solutions cuts Angola's growth to 3.5 percent this year and 1.8 percent in 2023

Consulting firm Fitch Solutions has revised down its forecast for the growth of Angola's economy, from 3.8 to 3.5 percent of GDP this year, predicting a further slowdown to 1.8 percent next year.

: DW/Renate Krieger
DW/Renate Krieger  

"We expect Angola's Gross Domestic Product to accelerate from an estimated 0.6 percent in 2021 to 3.5 percent in 2022, the fastest pace since 2004; given that China buys 60.2 percent of Angolan exports, the slowdown in Chinese demand led us to revise Angola's growth forecast downwards to 3.5 percent, compared to the 3.8 percent we had previously predicted," reads a note sent to investors.

In the analysis, which Lusa had access to, the analysts of this consultancy owned by the same owners of the financial rating agency Fitch Ratings point out that the slowdown, even so, demonstrates a strong recovery from the negative average growth of 1.4 percent of GDP in the last five years.

"The recovery will mainly be sustained by the increase in oil production and domestic consumer spending", which, together with the strengthening of the kwanza from the low levels of recent months, will cause inflation to fall from 25.7 percent in 2021 to 20 percent this year, "which eases the pressure on consumers' purchasing power, and allows household spending to rise, in real terms".

However, they add, "although the continued decline in inflation will increase consumer spending in 2023, oil production is expected to return to the negative trend, causing GDP to decelerate to 1.8 percent next year."

After six years of negative annual growth, with an average of 7.4 percent, oil and gas production in Angola is expected to increase by 3.5 percent in 2022, reaching 1.24 million barrels a day, but will return to a downward trend to end the decade below one million barrels a day, to 972,000 barrels a day, due to depleted wells, says Fitch Solutions.

In terms of economic growth, Angola is expected to grow above the sub-Saharan African average this year, which Fitch Solutions predicts will be 3.1 percent, after growth of 4.3 percent last year, but it will have an economic expansion below its regional peers, which next year are expected to register GDP growth of 3.7 percent.

"We expect sub-Saharan Africa's GDP to slow from 4.3 percent in 2021 to 3.1 percent in 2022, with supply-side pressures remaining high and demand from China slowing; rising cereal prices and energy since Russia's invasion of Ukraine is pushing up prices, which are expected to accelerate from an annual average of 7.8 percent in 2021 to 8.6 percent this year.

In forecasts for the region, Fitch Solutions sees Nigeria, the region's largest economy, slowing growth, from 3.4 percent last year to 2 percent this year, and in South Africa the forecast points to a sharp slowdown, from 5 percent of GDP last year to 1.7 percent this year.

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