Angola’s economy expected to grow at an average rate of 2.9% between 2017 and 2021

24 November 2016

Economic growth in Angola will remain dependent on the fluctuation of oil prices in international markets and is expected to come in at an average of 2.9% between 2017 and 2021, compared with 4.1% in the 2012 to 2016 period, according to forecasts from the Economist Intelligence Unit (EIU).

Given that tax revenues will remain relatively weak due to falling oil prices, the EIU predicts that Angola will record an average budget deficit of 5% of GDP in the 2017-2021 period.

The EIU, in its latest report on Angola to which Macauhub had access, said that the inflation rate should start to decline after the high figures recorded this year (the latest is 40.4%), down to 18.4 % in 2017 and maintain this downward trend until 2021, when it is expected to stand at 7.7%.

The national currency, the kwanza, will continue to lose value against the dollar because of the difficulty in obtaining the US currency as a result of low oil prices and the disparity with the exchange rate on the black market will remain high.

The EIU also said that the National Bank of Angola will remain focused on the need to contain rising prices through a restrictive monetary policy, as showb by the increase in the basic interest rate, the BNA rate, by 700 basis points to 16% between January 2015 and September 2016.

Further increases to the BNA rate should take place at least in the first half of the review period, from 2017 to 2021 due to the effect the devaluation of the national currency will have on the prices of products, both imported and domestic.

The Economist Intelligence Unit expects, however, that the Angolan central bank will come under pressure from the government to adopt a less rigid monetary policy if economic growth rates do not recover to higher values ​​when oil prices start to increase in 2017. (macauhub)