The Economist Intelligence Unit (EIU) analysts project Angola’s economy will return to growth only in 2021, expecting a rate of 2.5% after consecutive years of economic contraction, including in 2019, when the country is expected to see Gross Domestic Product (GDP) fall by 2.2%.
The latest EIU report on Angola states that when Angola’s economy returns to growth, 2022 and 2023 will be much more positive with expected growth rates of 4.1% and 5.0% respectively due to a gradual rise in oil prices and the non-oil economy improving its performance.
The economic studies department of South Africa’s Standard Bank projected that Angola’s economy would contract this year at a rate of -1.0%, before growing again in 2020 with a 1.4% expansion of GDP.
The EIU said in the statement that the weak economic scenario will continue to weigh heavily on the national currency, the kwanza, which this year is expected to depreciate to 345.6 kwanzas per dollar, which will worsen further towards the end of the period covered by this report to 400.1 kwanzas for every dollar.
The report recalled that oil production fell by almost 10% in 2018 to an average of 1.478 million barrels per day due to the maturity of oil fields and the lack of investment in new exploration and noted that despite the various tax benefits offered Angola has been unable to attract investors to the exploration of deep and ultra-deep wells where costs are highest.
The forthcoming concession of new blocks in two Angolan basins will only bring potential benefits in several years, so EIU analysts predict Angolan oil production will continue to decline in 2019 and 2020 as investment decisions are postponed.
The anticipated economic growth for the 2021-2023 period, with an annual average of 3.9%, is due to the improved performance of the non-oil economy, namely in agriculture, mining, construction, manufacturing and services, as access to credit increases.
The document underscored the efforts being made to attract investment and reduce nepotism and corruption but noted that the fundamental impediment to reform is the control that politicians have of the country’s economy, resisting changes to introduce greater transparency and reduce opportunities for anyone who just wants to have an income.