Consultant Fitch Solutions has revised its forecast for the evolution of Angola’s economy downwards, now anticipating a 1.5% recession this year, adding that it expects the country to grow 2.7% in 2022.
“At Fitch Solutions, we anticipate that Angola’s real Gross Domestic Product (GDP) will contract 1.5% this year, before growing 2.7% in 2022, which is a downward revision to our previous forecast of a growth of 1.7% this year and 3.3% in 2022”, reads a note sent to customers.
In updating its forecast, the consultancy firm justified the latest revision with “new forecasts on oil production” in Angola, the second-largest producer of crude in sub-Saharan Africa.
As such, Fitch Solutions has downgraded its forecast for oil production in Angola, now estimating that the country will pump 1.25 million barrels/day this year and 1.31 million in 2022, which contrasts with the previous forecast of 1.33 million this year and 1.43 million next year.
“This is due to the Government’s expectation that some projects will come into operation in the second half of this year, which may provide modest support for production, currently facing difficulties,” argue Fitch analysts.
In 2022, new projects by TotalEnergies and BP, which were postponed due to the effects of the covid-19 pandemic, will help make production recover, concludes the note.
In addition to the downward revision for this year, which makes Angola face the sixth consecutive year of recession since 2016, Fitch Solutions also points out that the economy’s growth average will be consistently below the region’s growth average until the end of this decade.
“Angola’s GDP will grow 2.6% on average between 2021 and 2030, below the 10-year average for sub-Saharan Africa, which is 3.7%, due to chronic underinvestment in aging oil wells, which had an irreversible effect in the country’s oil sector, and Angola will hardly be able to return to the levels of 1.5 million barrels per day registered before the pandemic”.
Fitch Solutions’ new forecast comes days after the International Monetary Fund revised Angola’s growth estimate downwards, pointing to a recession of 0.7%, which goes in line with the government’s own forecast, expecting negligible growth, with the finance minister admitting that a new recession this year is possible.