Despite a good overall performance on meeting the targets in its previous IMF programme Angola is not expected to seek a follow-up. High global oil prices will result in low external financing needs in 2022-26, leaving the sovereign comfortably able to meet its debt repayments, and the positive economic outlook will make debt rollovers seamless.
Given Angola's maturing oilfields, it is expected only a small rise in oil output in 2022, and material increases will not happen until 2024-26. Its expected a robust economic growth from 2024, reaching 5.1% in 2026 (from 2.8% in 2022). This will be supported by new oilfield projects that are expected to come on stream from 2024.
Average inflation rose in 2021, but its expected inflationary pressures to ease over the forecast period, reaching single digits by 2026, as a result of weakening global commodity prices.
The gross public debt/GDP ratio will fall rapidly, from an estimated 115% in 2021 to 60% in 2026, as fiscal surpluses and sharp appreciation of the kwanza in 2022 help to reduce the stock of debt.
Angola is forging trade relations with the EU and stands to gain more from this than other African countries that are currently trading with the EU. This is because Angola will export more hydrocarbons to the EU and expand trade in goods and services.
After five consecutive years of recession from 2016, real GDP grew in 2021 and will expand again moderately in 2022, reflecting a recovery in the mining, agriculture, transport and storage sectors. A high oil price environment will support growth through domestic demand channels but will not be a panacea for the country's myriad structural deficiencies. It is expected a growth of 2.8% in 2022, after expansion of 0.7% in 2021. The global economy will enter a downturn in 2023 including in China, a country that absorbs about 83% of Angola's crude oil exports in 2021.
This will have a toll on world oil prices, but not to a degree that should halt investment in oil assets. The forecast is real GDP growth of 2.4% in 2023, supported by the end of the tight monetary stance that has held since 2016, which contributed to protracted recession over subsequent years.
Oil output will drop marginally in 2023 as Angola reverts to sustainable capacity after exceeding that level in 2022. From 2024 we expect past investment in raising oil production and gains in output to deliver higher growth, complemented by diamond mining investments. We expect real GDP growth to average 4.7% a year in 2024‑26. Our growth forecasts remain vulnerable to volatile commodity prices, however, given Angola's over-reliance on oil and global economic headwinds.
Source : Adapted from the Economic Intelligence Unit Report – October 2022
