Angola's 'Achilles' heel' is currently the State's high debt service (capital repayment plus interest payments), which consumes 85 percent of revenue this year and 97 percent in 2024. Still, Standard Bank estimates that Angola can “escape a recession this year, considering that, if oil production stabilizes at the current 1.1 million barrels of oil per day, annualized GDP growth in the oil sector will become positive from the third quarter of 2023” .
“Angola faces a challenging economic situation, characterized by a substantial reduction in the surplus of its balance of payments current account, pressures on the exchange rate and foreign currency liquidity, increased inflation, and fiscal and external debt pressures, in many respects. similar to what is observed in some African economies”, said Fáusio Mussá, chief economist at Standard Bank for Angola and Mozambique.
According to the official, since the price of oil remains this year above the 75 dollars per barrel assumed in the General State Budget (OGE) for 2023, “it would be expected that Angola would have a better performance”.
“In the current context of oil price volatility, and exposure to the pressure of rising interest rates in the international market, it is recommended that Angola maintain prudence in macroeconomic management, to soften the impact on the economy of a lower liquidity supply in foreign currency”, revealed the chief economist at Standard Bank.
According to Fáusio Mussá, one of the main conclusions of this Economic Briefing is that Angola should “seek to generate fiscal and current account surpluses in the balance of payments, to serve as buffers for the shocks to which this economy is subject, due to its high dependence on oil. , while channeling more support to the most disadvantaged social strata who are most vulnerable to this type of shock”.
Economic recovery also depends to a large extent on the maintenance of economic reforms and Angola's ability to mobilize private investment.
For Luís Teles, CEO of the SBA, “there could be a great opportunity if Angola starts to focus more on exports”. “The solution must be the private sector and there must be more investment from the private sector, where the SBA assumes a role in facilitating this investment and wants to have an active, facilitating and primary role in boosting this private investment.”
In the welcome session at the event, the CEO also highlighted that the year 2023 “has been particularly challenging, with several unexpected and consecutive aspects”, such as the high interest rate at international level, “with no short-term reduction expected term”, the military conflict in Ukraine and more recently in the Middle East, as well as climate change and the “pressure that exists on the fair energy transition, particularly in oil-producing countries, such as Angola”.
Luís Teles also addressed the news that has revealed an “interesting economic recovery in China”, and revealed that it is estimated that 2024 “will bring more growth to the African continent and that the average GDP growth for Sub-Saharan Africa will be in the order of 4 percent ”.
The Economic Briefing is a periodic event created in 2018 by Standard Bank, aimed at the institution's clients, regulators and public institutions, which presents an overview of the macroeconomic situation and prospects for the future of the economy, revealing, on the one hand, a set of positive and favorable developments for the national economy and, on the other, some of the challenges that remain.