"Angola's economy will slow down due to the combination of low oil production and the effects of the recent fall in the kwanza in 2024 and 2025", analysts write in a comment on the evolution of the Angolan economy.
In the note, sent to investors and to which Lusa had access, Capital Economics analysts write that "GDP is expected to expand by just 1.5 percent this year, followed by a contraction of 0.5 percent in 2024" and admit that "the forecasts are well below the consensus of analysts, who expect growth of 2.1 percent and 2.8 percent for this and next year".
The note, released following the downward revision of the Government's growth forecast, which now points to an economic expansion of 0.9 percent, recalls that the Angolan economy grew 2.7 percent in the last quarter of last year and 0.4 percent in the first quarter of this year, and adds that "it is doubtful that things will improve in the coming quarters."
The reduction in the oil sector and the delays in investments in this industry "mean that production will fall further, which, together with lower oil prices compared to 2022, caused a reduction in the current account", analysts say, also predicting that inflation will rise significantly this year.
The devaluation of the kwanza, which lost 40 percent of its value against the dollar, the imposition of austerity measures, including the cut in fuel subsidies, "will push inflation to more than 25 percent in the coming months", analysts estimate, which also predict that the central bank will respond with a 300 basis point increase in the key interest rate, to 20 percent.
Regarding debt payments, which become more expensive with currency devaluation, as most of the debt is in foreign currency, Capital Economics foresees an increase in the debt to GDP ratio, but considers that "Angola will achieve avoid a default", warning, however, that "avoiding a sovereign default will be more difficult if there is a sudden tightening of external financing conditions or a drop in oil prices".
