"The main risks are oil prices falling below forecasts, which would put additional pressure on the official exchange rate, causing inflation to rise, excessive currency depreciation, which would increase external debt costs, putting the debt sustainability, and delays in major reforms, which would endanger long-term economic growth and political stability", write the analysts.
In a note on the main forecasts for Angola, sent to investors and to which Lusa had access, this consultant from the group that owns Fitch Ratings also predicts that the Angolan currency will devalue to the point of needing 997 kwanzas per dollar this year, and 1,007 in the next year.
The comment comes a few days after the revision of the growth outlook, with BMI analysts now predicting an economic recession in Angola this year, with a drop of 0.7 percent in the Gross Domestic Product (GDP).
"We forecast real GDP to contract by 0.7 percent in 2023, after expanding by 3.1 percent in 2022, which is a downward revision from our previous forecast of 1.8 percent", reads a note sent this week to investors.
In reviewing the prospects for the evolution of the Angolan economy, the analysts explain that "this review largely reflects the impact of the strong devaluation of the kwanza in June", and add that "the increase in inflation will impact on household consumption and business investment, which puts even more downward pressure on economic activity in the oil sector".
BMI, formerly known as Fitch Solutions, owned by the same owners of the financial rating agency Fitch Ratings, is one of the first consultants to assume the forecasts that Angola may return to the negative growth it faced between 2016 and 2021, prompting the intervention of the International Monetary Fund.
"As we did not foresee that growth would slow down to less than 1 percent [in the second quarter] and because of the strong devaluation of the kwanza, which fell 39.6 percent in June alone, and the inflationary impact, we now foresee that there will be a contraction of 0.7 percent in real GDP, worse than our previous estimate of 1.8 percent growth," they write.
The bad news continues in terms of inflation and oil production, with the BMI predicting an acceleration in inflation from 11 percent to 15 percent, reaching 17 percent at the end of the year compared to the same period last year, and with oil production falling 2.4 percent, which, combined with the 19.2 percent drop in the price of a barrel, to 80 dollars in 2023, "will increase the impact of the drop in oil production".
Looking to 2024, the BMI forecast points to a return to growth of 0.6 percent "due to the slight recovery in oil prices, which will rise 2.4 percent to US$83 per barrel, and the slowdown in the fall of domestic production", to 1.7 percent.