Angola is expected to see another two years of recession, with rates of -2.2% in 2019 and -1.9% in 2020, according to the latest forecasts from the Economist Intelligence Unit (EIU), released on Thursday.
The expected economic growth from 2021 onward at a rate of 2.5%, which will be followed by 4.1% in 2022 and 5.0% in 2023, will be the result of the positive developments in the non-oil sector.
The EIU analysts point out the reforms introduced by the new Angolan government in the oil sector to attract investment in the exploration of new deposits but add that this activity will take years to deliver and falls beyond the period under analysis (2018/2023).
Oil production fell by almost 10% in 2018 to an average of 1.488 million barrels per day, due precisely to the depletion of some of the wells and a lack of investment.
“Notwithstanding the introduction of numerous tax incentives, Angola has been struggling to attract international investment to deep and ultra-deepwater blocks, where the cost of extracting each barrel of oil is higher,” the EIU said.
Accordingly, the EIU expects Angola’s oil production to fall further in 2019 and 2020, remaining below the production quota of 1.48 million barrels per day agreed by the Organization of Petroleum Producing Countries (OPEC), with international oil prices expected to fall further and, consequently, investment decisions to be postponed.
The average economic growth of 3.9% per year over the 2021/23 period will be the result of the development of the agricultural, mining, construction, industry and services sectors, also due to the need to introduce reforms that improve the business environment considering the decline of the oil sector.
The EIU also forecasts a continued depreciation of the kwanza, Angola’s currency, in 2019, with the dollar averaging 338 kwanzas, which in 2023 is expected to have increased to 384.8 kwanzas. (Macauhub)