NKC African Economics, the African subsidiary of consultancy firm Oxford Economics, estimates that Angola’s economy should come out of recession this year and grow 1%, despite the 3.9% drop in industrial production registered between January and March.
We have lowered our growth forecast for 2021 from 1.7% to 1.0%, mainly due to the weaker-than-expected oil output in H1 2021. We project oil production to decline by 6.5% to 1.20 million bpd in 2021, despite Total’s Zinia Phase 2 project coming on stream in May this year. Unhappiness with the government looks unlikely to translate into electoral defeat for the MPLA in 2022, but the authorities are worried about increased anti-government demonstrations and the formation of a new opposition alliance. – NKC African Economics’ Angola Quarterly Update – June 2021
The lowered growth forecast is mainly explained by the production of oil and natural gas, which responds for 85.3% of the total index and which registered a decrease of 17.8% from January to March of this year, compared to the same period of 2020.
“Joining the analysis of the industrial production index with the last indicator on the economic climate, we foresee that the GDP in the first quarter has registered a moderate contraction”, the analysts explain.
NKC African Economics’ experts believe that “Angola’s oil production dropped 18% in the first quarter due to operational issues at costly deepwater wells,” noting that oil production data show a drop that continued at least until May.
“Fortunately, the rise in oil prices to more than US$70 benefited government revenues despite the drop in production,” their report concludes.