China becomes biggest market for Angolan exports, exceeding US

25 June 2007

London, United Kingdom, 25 June – China is already the largest destination for Angolan exports, having exceeded what has historically been the most important market, the United States (US), due to a 70 percent rise in China-Angola trade, said the Economist Intelligence Unit (EIU).

In its most recent report on Angola, the EIU said that US products continued to be have a bigger market in Angola than Chinese products, but that China would soon become Angola’s largest trading partner.

“Chinese imports [in Angola] remain low, particularly when compared with exports of Angolan oil, but are growing rapidly,” said the EIU analysts.

As well as this, they said, “it is likely that a large proportion of Chinese imports are not included in official statistics.”

Last year, the value of the balance of trade of the two countries totaled US$11.83 billion, or 70 percent more than in the previous year, according to official Chinese statistics cited by the Economist.

In November of last year, Angolan oil exports to China reached 477,000 barrels per day, exceeding those of Saudi Arabia, the world’s largest producer.

Between 2001 and 2005, according to the same source, the value of Angola’s exports to China rose ten-fold, reaching US$6 billion, while Chinese exports rose seven-fold, to US$441 million in 2005.

In the report, the EIU forecast that Angolan exports would rise from US$33.8 billion in 2006 to US$35.5 billion this year and US$42.7 billion in 2008.

Imports are expected to rise by some US$4.4 billion in the same three-year period, to US$15.7 billion in the next year.

Benefiting from the rise in trade, customs revenues rose to US$1.55 billion in 2006, or 44 percent more than in the previous year.

Also according to the EIU’s projections, economic growth is expected to remain “strong” over the next few years, but with GDP variation slowing from over 15.9 percent in 2007 to over 9.2 percent in 2008.

“The development in the oil sector will continue to dominate economic growth prospects,’ for Angola, but, the EIU analysts said, this expansion :will be capital intensive and dependent on imports, with few links to other economic areas, other than sectors dominated by the government, such as construction.”

In relation to diamond production, in 2006 it rose to a total of 5.5 million carats (400 million euros, or 25 percent more than in the previous year), mainly due to the sector’s largest project, Sociedade Mineira de Catoca.

EIU figures show that this year production is expected to reach 10 million carats and 18 million in 2010.

With “massive” investment by the government, inflation will see pressure to rise to 15.6 percent this year and 15.2 percent next year.

this investment includes 1,200 kilometers of roads in 2007, refurbishment of airports, expansion of electricity transmission and production and rehabilitation of the rail sector.

Low productivity, a lack of infrastructures and the over-valuation of the Angolan kwanza are affecting development projects in the agricultural sector, which are moving ahead but :slowly” according to the EIU.

The industrial sector is facing better conditions, particularly cement, which is expected to have investment of around US$1 billion over the next few years, according to the official press.

In relation to the political scenario, the EIIU said that the MPLA party should win the expected legislative elections (2008), and its leader, the current president, José Eduardo dos Santos, will l win the presidential elections in 2009. (macauhub)