"The national currency remains vulnerable to changes in global sentiment and is expected to depreciate by more than 60 percent in 2020 compared to last year, which will continue to put pressure on consumer prices due to Angola's heavy dependence on imported goods," writes the analysts of this African branch of British Oxford Economics.
In a commentary on inflation in Angola, sent to clients and accessed by Lusa, analysts write that "the gradual implementation of a VAT of 14 percent, as well as anticipated increases in fees for higher education, will continue to put pressure on inflation in 2021".
So analysts now say they expect average inflation of 22.4 percent this year, worsening from 17.1 percent last year, and forecast to slow to 20 percent growth next year.
Prices in Angola rose 1.81 percent between September and October, according to a monthly report from the National Statistics Institute (INE), putting 12-month accumulated inflation at its highest since December 2017.
"Despite poor economic conditions, inflation continued to rise in 2020, mainly due to the drop in oil prices this year and last year's currency liberalization, which caused the kwanza to lose 25 percent of its value since the start of the year," analysts point out, noting that on average in October it took 645 kwanzas to buy a dollar, "the worst currency register ever".
In the proposed General State Budget for 2021, Luanda estimates an annual accumulated inflation rate of 18.27 percent for next year.
In early September, rating agency Fitch predicted a 4 percent recession in Angola and an increase in inflation to 24 percent this year.
"The contraction in the oil sector, combined with the lack of liquidity in dollars, will keep Angola in the fifth consecutive year of recession, with a contraction of 4 percent and an acceleration of inflation to 24 percent this year, well above the average for countries with a B rating of 4.8 percent," the agency said then, adding that the Angolan economy "continues to be limited by the high level of dependence on raw materials".
Due to the covid-19 pandemic, there was a reduction in the price of a barrel of oil, which led to member states of the Organization of Petroleum Exporting Countries and their partners reducing production in order to balance the price of a barrel of oil.
