Angola Country Risk Report

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

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  • Understand and measure the political, business environment and operational risks to your company
  • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
  • Get the long-term political outlook and explore possible scenarios for change
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Angola Country Risk Report
Product Price
$1,195.00

Core Views

  • 2016 will mark another year of slow growth in the Angolan economy as the legacy of the oil price collapse continues to pose a headwind. The completion of several legacy investments into the hydrocarbon sector will see some uptick in growth in 2017, but the structural vulnerabilities attached to oil dependence will remain a persistent issue for the economy.

  • A more robust recovery in oil prices and the government's commitment to cutting expenditures will facilitate a smaller fiscal deficit in Angola than previously expected. Nevertheless, the public debt burden will remain dangerously high and government cuts will entail a slowdown in the much needed development of the country's infrastructure network.

  • The beginnings of a recovery in the oil price and a strong outlook for production mean the risk posed by Angola's external position will decrease over the next 12 months. However, any narrowing of the country's trade deficit will not portend a structural improvement in economic fundamentals of Angola's external position, which will remain highly dependent on the global oil market.

  • Inflation will remain high as prolonged food shortages increase the cost of the consumer basket in Angola, prompting the Banco Nacional de Angola to carry out further rate hikes before year-end 2016. However, the decision to implement a more stable trajectory of kwanza devaluations will see inflation slowly fall from its current highs in the second half of 2016.

  • Although by no means guaranteed, a managed transfer of power to a chosen successor is the most likely outcome of President Jose Eduardo Dos Santos' decision to step down from office in 2018. While ignoring democratic principle in any transition of power would increase resentment towards elites and heighten political risk, policy continuity would more than offset most of the impact on investor sentiment.

Major Forecast Changes

  • We have revised our forecasts for Angola's budget deficit in 2016 as oil prices trend higher than previously expected, and the government signals its commitment to more austere fiscal policy with a revised budget and negotiations with the IMF. As such, we expect the deficit to equal just 4.3% of GDP, compared to our previous forecast of 8.1%.

Key Risks

  • The government decides it can no longer dedicate the amount of reserves required to sustain the kwanza's stability, and instead lets the currency free float at the market rate. This would likely lead to significant depreciation and subsequent inflation as import costs rose.

  • Public opposition to the incumbent government reaches boiling point and President Jose Eduardo dos Santos is forced out of office, leaving a power vacuum in his place. Populist groups rise to the fore in this environment, increasing the risk of industry nationalisation.

Macroeconomic Forecasts (Angola 2014-2017)
Indicator 2014 2015e 2016f 2017f
e/f=BMI estimate/forecast. Source: National Sources/BMI
Real GDP growth, % y-o-y 4.8 2.2 2.7 4.5
Nominal GDP, USDbn 146.3 107.4 98.8 110.3
Consumer price inflation, % y-o-y, eop 7.5 14.3 19.6 13.0
Exchange rate AOA/USD, eop 102.86 135.22 173.00 180.00
Budget balance, % of GDP -5.7 -8.7 -4.3 0.7
Current account balance, % of GDP -2.5 -7.7 -8.9 -3.1
Executive Summary
5
Core Views
5
Key Risks
5
Chapter 1: Economic Outlook
7
SWOT Analysis
7
BMI Economic Risk Index
7
Economic Growth Outlook
8
Dollar Shortage Will Constrain Economy During Weak Oil Prices
8
GDP By Expenditure Outlook
9
TABLE: GDP GROWTH FORECASTS
9
TABLE: PRIVATE CONSUMPTION FORECASTS
9
TABLE: GOVERNMENT CONSUMPTION FORECASTS
10
TABLE: FIXED INVESTMENT FORECASTS
10
TABLE: NET EXPORTS FORECASTS
10
Fiscal Policy And Public Debt Outlook
11
Government Spending Cuts Will Facilitate Fiscal Recovery
11
Structural Fiscal Position
12
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
12
External Trade And Investment Outlook
13
External Dynamics Vulnerable Despite Recovery In Oil Revenues
13
Outlook On External Position
14
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
14
TABLE: TOP FIVE GOODS IMPORTS IN 2015
15
TABLE: TOP FIVE GOODS EXPORTS IN 2015
16
Monetary Policy
16
Persistent Inflation Will Prompt Further Rate Hikes
16
Monetary Policy Framework
18
Currency Forecast
19
AOA: Depreciatory Trend To Continue At Slower Rate
19
TABLE: BMI CURRENCY FORECAST
19
Chapter 2: 10-Year Forecast
21
The Angolan Economy To 2025
21
Opportunities On Offer After Years Of Pain
21
TABLE: LONG-TERM MACROECONOMIC FORECASTS
21
Chapter 3: Political Outlook
25
SWOT Analysis
25
BMI Political Risk Index
25
Domestic Politics
26
Three Potential Outcomes From Dos Santos' Succession
26
TABLE: POLITICAL OVERVIEW
26
Long-Term Political Outlook
28
Path To Political Inclusion Uncertain And Slow
28
Chapter 4: Operational Risk
31
SWOT Analysis
31
Operational Risk Index
31
Operational Risk
32
TABLE: OPERATIONAL RISK
32
Economic Openness
33
TABLE: FREE TRADE AGREEMENTS
33
TABLE: FREE TRADE ZONES AND INVESTMENT INCENTIVES
34
Availability Of Labour
40
TABLE: SUB-SAHARAN AFRICA - AVAILABILITY OF LABOUR RISK
41
Chapter 5: BMI Global Macro Outlook
45
Global Macro Outlook
45
Summer Of Risk
45
TABLE: GLOBAL ASSUMPTIONS
45
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
46
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
47
TABLE: MACROECONOMIC DATA & FORECASTS
49

Assess your risk exposure in Angola with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in Angola with confidence.

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