World Bank remains reserved about progress of Angolan economy, but sees “light at the end of the tunnel”

31 August 2009

Luanda, Angola, 31 Aug – The difficulties of the Angolan economy remain but there are signs that show positive development of the crisis affecting the country since 2008, teh World Bank said in its August report.

The World Bank’s chief economist in Angola, Ricardo Gazel said, “we can now see the light at the end of the tunnel,” but added that despite “some indications, the difficulties are still many,” on the way out of the crisis.

In the monthly report, Gazel remembered that the international crisis had “badly hit” the Angolan economy with the sharp drop in oil prices in mid 2008 leading to great difficulties in the first half of 2009, with a “high level of uncertainty and nervousness,” of economic agents.

Proof of the crisis was recently demonstrated with confirmation by the country’s economy minister, Severim de Morais, of delays in payments to construction companies totalling around US$2 billion.

Considering teh current scenario, Gazel said that the Angolan economy would no longer contract by a real 3 percent as the World Bank had projected in January.

“Since January some conditions have changed and the most important was the size of oil production cuts for 2009. Instead of the 13 percent cut agreed with OPEC; which was written in the state budget review, the cut was just 6 percent,” Gazel noted.

The World Bank economist highlighted, however, that these cuts “continue to have a negative impact on GDP, but at a significantly lower level,” of around 3 percent rather than 7 percent if cuts had been of 13 percent.

Faced with this scenario, Gazel explained in the document, growth of Angola’s GDP, “depends on the magnitude of growth in the non-oil sector.” (macauhub)