This year was expected to be one of economic recovery for Angola, but according to the latest government forecasts, 2019 will, in fact, be a year of marginal growth, at best.
Following contractions of 2.6% and 0.1% in 2016 and 2017, respectively, the Angolan economy is expected to have continued last year’s decline to -1.7%, the Economy and Planning minister, Pedro Luís da Fonseca said in February.
The expected growth of 2.8% recorded in the State Budget for 2019, and welcomed by economic agents, have now been revised downwards by the Ministry of Finance, in its Medium-Term Indebtedness Strategy (2019-2021), to just 0.4%.
Banco de Fomento Angola reported in an analysis note that the difference is mainly due to lower forecasts for the oil Gross Domestic Product (GDP), which is expected to fall by 2.2%, instead of growing by 1.7%, as initially estimated.
“If confirmed, this is consistent with an oil output of below 1.49 million barrels per day for the full year. This would prove to be a more negative scenario than expected, as it would not even cover the export quota allowed by OPEC,” taking into account the oil used internally for refining.
The government now expects a return to growth in 2020 and 2021, of around 3.2%, with non-oil GDP accelerating from 1.5% in 2019 to 3.7% in 2020 and 4.5% in 2021.
Government forecasts for 2019 are more optimistic than the latest from the Economist Intelligence Unit (EIU), which estimates a further contraction over the next two years of 1.9% each year before returning to growth in the period from 2021 to 2023.
According to the EIU, the weak domestic economy, combined with the appreciation of the US dollar and weak investor appreciation of emerging markets, will continue to weigh on the kwanza in 2019, which will tend to depreciate.
This year and next low oil prices will continue to have a negative influence on the country’s economy, but between 2021 and 2013, with rising prices and increased production, there will be a reversal of negative to positive rates.
Accordingly, EIU analysts expect that the Angolan economy will grow at an annual average of 6.3%, with a maximum rate of 7.0% in 2021 and a minimum of 5.9% in 2023.
The EIU added in its report that, despite efforts to diversify the economy, activity will continue to be dependent on developments in the oil sector, with no major changes to be expected in the short to medium term. (Macauhub)