Ver Angola

Economy

BFA: economy may face in 2020 “biggest contraction since the civil war”

The study office of Banco Fomento Angola (BFA) predicts a "strong recession" in the economy during 2020, expecting "the biggest contraction since the civil war", which may exceed 5 percent, sustained by the drop in oil production.

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In a note sent to customers about the evolution of the economy, BFA writes that 2020 should be "a very complicated year for the Angolan economy, with economic activity expected to have the biggest contraction since 2008", adding that in 2020 it is expected " that the Angolan economy will have its biggest contraction since the civil war [which ended in 2002], possibly exceeding 5 percent ".

Analysts point out that with the agreements established between the Organization of the Petroleum Exporting Countries (OPEC) and its partners (OPEC +) "oil production is expected to continue falling year on year as long as demand for this commodity does not return to pre-levels -pandemic".

The BFA study office points out that the Gross Domestic Product (GDP) contracted 1.8 percent in the first quarter compared to the same period in 2019.

"The oil sector had its less pronounced decline in 2 years (-1.7 percent); however, in the opposite direction, the non-oil economy will have returned to the same falls, after several quarters in which it will have grown, according with BFA calculations, based on INE numbers ", says the document.

The BFA study office adds that the "progress of the economy" will also "be dependent on the future evolution of the pandemic" and "on negotiations with creditors and with multilateral partners (IMF and World Bank), which will determine the budgetary space for the Treasury and any additional foreign currency inflows (or smaller outflows) ".

The revised OGE 2020, estimated at 13.4 billion kwanzas, predicts a deficit of 4 percent to the 15 billion kwanzas of the previous proposal and with an average oil price of $ 33 a barrel.