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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  • 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

  • Angola will continue to struggle with slow economic growth over the next two years, as high inflation replaces low oil revenues as the economy's main headwind. While macroeconomic fundamentals will begin to improve from H216 as prices begin to stabilise and investment returns to the oil sector, we highlight the potentially destabilising effect of elevated political risk in the approach to 2017 presidential election and President Jose Eduardo Dos Santos' planned succession in 2018.

  • Significant devaluations made to the local currency will see Angola's fiscal deficit narrow dramatically over 2016, particularly given the government's efforts to curtail spending in the wake of the oil price collapse. While this will deny the economy a useful macroeconomic buffer in the form of fiscal stimulus during a period of weak growth, it will alleviate pressure on the government's debt burden.

  • Angola's balance of payments will show signs of improving health over the coming quarters, as a recovery in the country's oil sector returns greater flows of foreign capital into the economy via both the financial and current accounts. However, we see little sign of progress towards reducing the country's dependence on this sector over our short-term outlook.

  • Angola's central bank will enact further hikes over the course of 2016 in a bid to bolster real interest rates and temper inflation. However, a more stable currency will see inflation slow by 2017, prompting no further hikes, but historically high rates of inflation will similarly prevent against the beginning of looser monetary policy until 2018.

  • The recovery in oil prices portends a more stable period for the Angolan kwanza over the coming months, despite the persistence of a wide disparity between the official and black market exchange rate. High inflation and ample foreign reserves will encourage the central bank to maintain consistent intervention in the exchange rate.

  • While Angola faces elevated political uncertainty in the years ahead due to the forthcoming departure of long-time president Jose Eduardo Dos Santos, we continue to expect a managed succession whereby power is kept within his own party's elites. Although this will ensure broad policy continuity, it also means that the prospects for political and economic reform are limited and raises the likelihood of increased political unrest.

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 2.1 2.4
Nominal GDP, USDbn 146.3 108.1 97.4 121.6
Consumer price inflation, % y-o-y, eop 7.5 14.3 27.5 16.0
Exchange rate AOA/USD, eop 102.86 135.22 173.00 180.00
Budget balance, % of GDP -5.7 -8.9 -3.3 -0.8
Current account balance, % of GDP -2.5 -7.0 -9.3 -4.4
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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