Consulting company, Fitch Solutions has revised Angola’s real gross domestic product (GDP) growth downwards to 1.5% from 2.8%.
GDP growth was reviewed on the 20th of September, 2018, below its expected benchmark. The country is now expected to have a 1.5% GDP growth this year given the growing tendency for the declining trend witnessed in oil production.
GDP is the broadest quantitative measure of a nation’s total economic activity. It represents the monetary value of all goods and services produced within a nation’s geographic borders over a specified period of time.
“We have now updated our estimates of Angolan GDP growth to 1.5% in 2018, a representative difference from the previous 2.8% we had anticipated, and we expect GDP to grow by 2.3% in 2019, instead of the previous 2.6% estimate, whereas for 2020 we’ll estimate it to hit 2.6%, which is higher than the previous estimate of 2.2% for that year,” Fitch Solutions said in an announcement issued this week.
In a memo sent to investors, some other Fitch analysts from the consulting company, who have no ties to the analysis in question, have said that although Angola will be most likely out of the recession trend for the next few quarters, the economic recovery will be weaker than expected previously, mostly due to the decline in oil production in the country.
The government had estimated GDP growth to arrive at a 2.2% threshold, in comparison to the 4.6% estimate they had announced previously, whereas the IMF predicted GDP to get to 2.3% this year.
Private consumption and public investment are adding up to the economy and “they shall make the economic growth move positively in the following years, with great potential coming from foreign investment and international financial aid”, said the analysts, referring to a programme being negotiated in October with the International Monetary Fund, which will add €1.5 billion to the state’s treasury.
However, they alert that “in the long-term, the high exposure of Angola to the volatility of the oil sector will put the country under pressure and could induce the GDP growth estimates to go lower”.
Eight years ago, Angola’s economy was one of the fastest-growing in the world, with reported annual average GDP growth of 11.1% from 2001 to 2010. The country is still recovering from 27 years of the civil war that plagued the country since its independence in 1975 to 2002.
Nonetheless, the World Bank, a global lender and advocate for development, states that Angola has maintained political stability since the end of the 27-year civil war in 2002.
In 2010, a Constitution established a presidential parliamentary system with the president no longer elected by direct popular vote but instead as the head of the party winning the most seats. The 2010 Constitution sets a limit of two, five-year presidential terms.
As a result of these and other economic reforms, Angola’s inflation decelerated to 20.2% in June 2018 compared with 26.3% at the end of 2017.