IMF expects Angolan economy to grow by 2.7% in 2017

1 November 2017

The rate of growth of the Angolan economy is expected to vary between 2.7% this year and 3.0% in 2022, with values in this range in the remaining years under analysis – 2018, 2019, 2020 and 2021 according to the latest report on the country by the Economist Intelligence Unit (EIU).

These rates are the result of a slightly more robust expansion of private and public consumption, as the country has adjusted  to lower oil prices, leading to average growth of 2.4% in 2018/2020.

The growth of the economy should accelerate slightly to an average of 2.9% in 2021/2022, as oil prices tend to rise, but investments outside the oil sector should continue to be hampered by a lack of reforms.

The document emphasises that these growth rates, around a quarter of those recorded in the decade to 2014, can be pushed upwards if the new President adopts measures that favour the private sector, in line with what was requested by the International Monetary Fund (IMF).

In terms of the State Budget for 2018, the EIU writes that the new government should have little flexibility in drafting it, given that the country’s economy is still dependent on the production and export of crude oil.

The performance of the oil sector will continue to have a substantial impact on the drafting of the Budget, with the EIU expecting the budget deficit to be around 7.1% per year in the period from 2019 to 2022, due to the pressure to increase public spending.

The government of Angola, the document said, will continue to finance this deficit with a combination of internal and external debt and will continue to try to secure financing from China for public works, including roads and thermal power stations and hydroelectric dams.

The control of inflation will remain one of the main concerns of the Angolan central bank, with the EIU expecting rising interest rates due to the impact on prices of a weak national currency, the kwanza, against major currencies. (macauhub)