Angola will only return to economic growth in 2021, when the economy’s growth rate is expected to reach 2.4%, after falling 3.8% this year and 1.4% in 2020, according to the latest country report produced by the Economist Intelligence Unit (EIU).
The following years in the 2019/2024 range covered by this report are expected to see higher economic growth rates, such as 4.5% in 2022, 3.4% in 2023 and 6.2% in 2024.
The expected growth in 2024 stems from the likely increase in oil production, after consecutive years of falling to levels that do not even meet the maximum allowed by the Organization of Petroleum Exporting Countries (OPEC), for example falling to 1.356 million barrels per day in October.
The agreement signed between the OPEC member states stipulates that Angola’s oil production cannot exceed 1.693 million barrels per day, and the country was forced to reduce production by 78,000 barrels per day from 1 January 2017 to respect the agreed limit.
The Angolan government recently launched an international public tender for oil concessions in 10 blocks in the Namibe and Benguela basins, and the proposals put forward by the Sonangol, ENI and Total groups were approved while the one presented by Pag Technical Group was only condiitionally accepted due to non-conformities detected in filling out the forms.
The EIU expects that the investments to be made in oil exploration in Angola will allow for a moderate increase in Angolan oil production, hence the forecast of increased economic growth expected for the last year of the analysed period, and it also expects oil prices to rise.
Part of the projected growth will be the result of growth in the non-oil sector of the economy, with agriculture, mining, construction, manufacturing and service that the government plans to support, notably by boosting investment credit as several oil fields are being depleted and the investment needed to explore others in ultra-deep waters is not worthwhile.
The document projects that the weak economic growth forecast for this year will continue to weigh on the national currency, the kwanza, whose exchange rate is expected to end the year at 458 kwanzas per dollar, and will then steadily depreciate at a slower pace, requiring 490 kwanzas to buy a dollar by 2024.
The inflation rate, another important indicator for Angola, is expected to stand at 17.8% this year, rising to 21.6% in 2020, and falling until 2024 to a rate of 10.4%. (Macauhub)