Angola is expected to have two consecutive years of contraction of its economy, with the Economist Intelligence Unit (EIU) forecasting negative rates of 4.5% in 2019 and 4.8% in 2020, according to the latest analysis of the country’s political and economic situation.
The EIU predicts that Angola will only return to growth from 2021, when its economy is expected to grow by 4.2%, before falling to 3.5% in 2022 and 3.4% in 2023, the years covered by this report.
The reason for two consecutive years of economic contraction stems, according to the report, from the evolution of oil prices, on which Angola’s economy depends by about 70%, “given that the efforts made to diversify have produced few visible results.”
The weakness shown by the Angolan economy, according to EIU analysts, will continue to weigh significantly on the value of the Angolan currency, the kwanza, which currently stands at 324.4 kwanzas per dollar, and continued downward pressure is expected.
“At the end of the period under review, 2023, the Angolan currency will have depreciated to 361.9 kwanzas per dollar,” said the EIU report.
EIU analysts also expect the inflation rate to remain high, rising to 22.8% in 2019, then slowing to slightly lower figures, reaching 11.4% in 2023.
The National Bank of Angola, which in January 2019 lowered the benchmark interest rate from 16.5% to 15.75%, is expected to keep the rate unchanged this year to stimulate the non-oil economy, despite price increases resulting from the depreciation of the Kwanza.
The International Monetary Fund (IMF) forecasts economic growth of 0.4% and an inflation rate of 17.5% for Angola in 2019. (Macauhub)