Strong growth in Angola's crude oil production will pave the way for more robust real GDP growth in 2016. The resulting increase in government revenues will contribute to several infrastructure projects that will also support GDP over the year. However, increasing import costs as the effects of currency devaluations feed through into prices will pose a strong headwind.
Angola's current account deficit will record a mild improvement in 2016, as increasing oil production boosts export revenues in a climate of falling commodity prices. Even so, the deficit will remain high, financed by a mixture of external debt, and central bank reserves.
The Angolan government's crackdown on public displays of opposition is indicative of the fears surrounding the issue of President Eduardo Jose Dos Santos' succession. Although specific details of his succession remain unclear, there will be increased public protest and government violence as competing interests fight to have their voices heard.
As with many commodity dependent African countries, Angolan monetary policy will be determined largely by fluctuations in the value of the local currency. The likelihood of further devaluations of the kwanza will result in further hikes in the key policy rate in Q116, despite the decision to maintain rates at the latest monetary policy committee meeting.
The Angolan government is on the brink of a liquidity crisis owing to rising levels of external debt amid a climate of low revenues by recent standards. However, thanks to strong growth in oil production over the next two years and large offshore crude reserves, this crisis will not come to bear over our five-year outlook period.
Major Forecast Changes
The government's decision to maintain high levels of expenditure in the latest budget have led us to revise our forecasts for Angola's fiscal deficit, which we now expect to reach 2.8% of GDP in 2016.
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.
|e/f = BMI estimate/ forecast. Source: National Sources/BMI|
|Real GDP growth, % y-o-y||6.8||4.9||2.4||3.7|
|Nominal GDP, USDbn||119.4||118.9||97.0||95.5|
|Consumer price inflation, % y-o-y, eop||7.7||7.5||12.5||10.5|
|Exchange rate AOA/USD, eop||97.61||102.87||140.00||151.20|
|Budget balance, % of GDP||0.3||-5.4||-4.5||-2.8|
|Current account balance, % of GDP||7.0||-3.1||-11.8||-10.7|
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.
Your subscription service includes:
- Delivery of the report in print, PDF and online formats
- The functionality to translate your online report into your choice of 10 languages - Arabic, Chinese, French, German, Italian, Japanese, Korean, Portuguese, Russian and Spanish
- The ability to export data and graphs from the online report directly into your workflow
- The support of a dedicated Account Manager to answer any questions you might have about your subscription
- Access to our team of leading analysts who will be happy to answer any questions you might have about the data and forecasts included in this report