Africa Economic Forum Angola


The demand for oil around the world has largely determined Angola's economic performance, resulting in unstable development and high rates of inequality and poverty. Over the last five years, reforms have enhanced public sector governance and macroeconomic management. A more flexible exchange rate regime, the independence of the central bank, prudent monetary policy, and fiscal austerity have all improved macroeconomic stability. More private sector participation in the economy is now permitted by law, which improves financial sector stability.

Growth speeded up to 3% in 2022 from 1.2% in 2021, driven by growth in non-oil industries and a slight increase in oil production. Increased oil prices supported stronger domestic demand and led to a 7% increase in private spending by enabling fiscal expansion, particularly in public investments, and the appreciation of the national currency.

Recent Macro Economic and Financial Development

Real GDP growth increased from 1.1% in 2021 to 3.0% in 2022. Due to the high rate of population growth (3%), income per capita growth in 2022 remained negative (0.2%). Due to Russia's invasion of Ukraine, oil prices remained high in 2022, contributing to GDP growth. Angola's crude average price per barrel was $100.65, which was more than the conservative $59.00 national budget for 2022 was predicated on, and brought in an estimated $17.18 billion in additional revenue. The budget surplus increased to 3.0% of GDP in 2022 from 1.9% in 2021 due to high oil earnings. Modest oil exports, on the other hand, caused the current account surplus to fall from 11.2% of GDP in 2021 to 8.9% in 2022, although the debt-to-GDP ratio also decreased over the same time, falling to 56.1% from 82.9%.

Better terms of trade reduced the strain on global inflation caused by Russia's invasion of Ukraine. From 25.8% in 2021 to an expected 21.3% in 2022, food inflation and total inflation were decreased due to higher export earnings and agricultural output. In 2022, the banking industry saw improvement as well, with a favorable economic performance and a decrease in private sector debt. However, the nation still struggles to lower the poverty rate (which was 40.6% in 2019), and unemployment is still high at 30%.

Outlook and Risks

Due to the Russian invasion of Ukraine and the post-COVID-19 economic rebound, crude oil prices are expected to stay higher than the $75.00 per barrel estimated in the national budget for 2023, which will improve medium-term growth prospects. The GDP is expected to expand by 3.5% in 2023, which, given the rapid population growth, will result in a low predicted GDP per capita growth of 0.2%. Because of the availability of export revenue in a flexible currency rate pass-through, inflation is predicted to decline even further, to 13.2% in 2023 and 9.6% in 2024.

The main risk to the projection is the unpredictability of oil prices, which is why the national budget for 2023 makes the assumption that oil prices would remain constant. In the event that oil prices maintain steady, a 0.3% GDP budget surplus is anticipated, with the current account remaining in surplus at 4.3% of GDP in 2023 and the debt-to-GDP ratio declining to 52.5%.

Climate change issues and policy options

Angola created its National Climate Change Strategy (2018–2030), outlining a plan for addressing climate change in relation to its obligations under the Paris Agreement. The nation pledged to cut its greenhouse gas emissions by 24% by 2025 in its Nationally Determined Contribution (NDC), and it set up a Climate and Environmental Observatory to track emissions. According to Angola's NDC, $44.1 billion in climate finance will be required between 2021 and 25 to support the green growth strategy; 99.7% of this money would go toward mitigation and the remaining 3% will go toward adaptation. Although there is room for private investment in renewable energy, especially in off-grid solar projects for rural areas, there aren't many options for internal funding.

A dedicated national climate fund, strengthened public resource generation systems with green taxes, and institutional improvements in regulatory frameworks to permit private participation as independent power producers are necessary to unlock the potential of climate finance. Public-private partnerships must also be structured in a way that supports growth initiatives with private participation.

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