Business Monitor Remain Reasonably Bullish On Angola’s Economic Growth Prospects Over the Next Five Years

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Business Monitor examines key issues affecting Angola’s economic, political and business environment and provides short and long-term forecasts for the country.

industry analysis, business forecasts, business monitor
With inflation remarkably stable at close to 9.0%, the monetary authorities have shifted their focus firmly towards stimulating growth.

Business Monitor has just released its latest findings on the Angolan market in its newly-published Angola Business Forecast Report.

Following an impressive return to form in 2012, Business Monitor remain reasonably bullish on Angola’s economic growth prospects over the next five years. They expect real GDP expansion of 7.3% in 2013 and 6.3% in 2014 on the back of surging fixed investment and rebounding oil production.

Twelve months since the one-sided re-election of President José Eduardo dos Santos and his ruling Movimento Popular de Libertação de Angola (MPLA), there has been little change to the political status quo. With the president giving little away on the topic of succession, Business Monitor’s overarching view over the short-to-medium term is one of continued stability.

With inflation remarkably stable at close to 9.0% – a level it has hovered around since the end of last year – the monetary authorities have shifted their focus firmly towards stimulating growth. The Banco Nacional de Angola have enacted 50bps worth of interest rate cuts so far in 2013 and Business Monitor expect monetary policy to remain accommodative over the coming quarters.

Business Monitor’s outlook for Angola’s balance of payments position remains broadly favourable, and despite a vulnerability to external shocks, they believe Angola’s external position is strong by regional standards. Having peaked at an estimated 11.8% of GDP in 2011, they forecast Angola’s current account surplus to narrow steadily to 5.3% of GDP by 2016.

Major Forecast Changes:

Business Monitor have made some adjustments to their forecasts for Angola’s fiscal accounts this quarter. The revision is mainly due to the recent rally in global oil prices, driven in part by developments in Syria. They now believe Angola will post a narrower-than-anticipated budget deficit in 2013 on the back of increased oil revenues. They are projecting deficits worth 2.7% of GDP in 2013 (revised up from 3.5%) and 4.5% in 2014 (revised down from 3.4%).

Key Risk to Outlook:

While Business Monitor expects oil production to contribute positively to GDP growth over the medium term (before peaking around 2018) as a number of major projects start production, their forecasts remain subject to the myriad uncertainties associated with oil production and exploration in Angola, as well as to volatility in global oil prices.

Given that Business Monitor forecasts only include planned oil projects, the upside potential posed by the country’s vast and as yet unexploited sub-salt reserves pose a major upside risk to their forecasts over the medium-to-long term. Although inflation has been remarkably stable in recent quarters, Angola remains susceptible to fluctuations in the cost of goods and services given its heavy dependence on imports. A sharp rise in regional food prices, caused by drought for instance, would pose a significant downside risk to Business Monitor’s forecasts.

Business Monitor is a leading, independent provider of proprietary data, analysis, ratings, rankings and forecasts covering 195 countries and 24 industry sectors. It offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities.

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Sarah Sutcliffe
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since: 03/2009
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Business Monitor International
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