Credit rating agency Fitch predicts that the Angolan economy will grow 1.7% this year, supported by increased production and external demand for oil, boosting exports in the second half.
Fitch expects a modest 1.7% growth for Angola this year, after a five-year recession, supporting their forecast on rising domestic oil production and external demand, which will support the recovery of Angolan exports towards the end of the year.
In an analysis of the main economies in Southern Africa, Fitch believes that this expansion of 1.7% is well below the growth of the population, at 3.3%, which means that GDP per capita will continue to fall and popular dissatisfaction will increase.
Oil exports continued to fall in the first quarter of this year, despite having risen in March compared to February, and curfews and some restrictions on non-essential businesses will remain in effect until at least May 10, the report points out.
These factors will continue to hamper economic activity, which fell 5.8% in the third quarter of last year, after a major contraction of 8.2% in the second quarter of 2020, it adds.
Domestic demand will remain low due to the effects of the covid-19 pandemic, whose vaccination has only reached 0.8% of Angolans, said Fitch Ratings, considering that distributing vaccines to 33% of the population living in rural areas it will be a logistical challenge.
For Fitch Ratings, social discontent will continue to be the greatest source of political risk in Angola in the short term, as painful reforms will continue to play a fading role in the risks of social stability in the short term, increasing the effects of a five-year recession.
Regarding sub-Saharan Africa, Fitch foresaw an uneven and tepid economic recovery, with the growth of the regions remaining below historical averages.
Analysts at the rating agency estimate that the region will grow 2.9% this year, below the average of 4% recorded between 2010 and 2019, but recovering from the historical drop of 2.7% last year.
Economic activity continued to recover in the largest sub-Saharan economies in the first quarter, despite at a more moderate pace than in the last quarter of last year, they said, noting that although there is still no data on growth from January to March, the index that measures business activity remained above 50 points in the main markets, which indicates continuous improvements in business activity.
However, they warned, the rise in infection rates and the slow vaccination process will lead governments to maintain restrictions on social distance for most of the year, which will negatively influence consumer and business activity.
Fitch Ratings’ comment comes in the same week that the International Monetary Fund (IMF) cut Angola’s economic growth forecast from 3.2% to 0.4%, with the Government expecting growth close to zero for this year.
If it comes to be, this should mark the end of a recession into which the country has plunged since 2016, and which comes after a 5.2% contraction in 2020, according to preliminary data from the Angolan National Institute of Statistics.