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Angola Business Forecast Report Q3 2014

  • June 2014
  • -
  • Business Monitor International
  • -
  • 43 pages

Core Views


The Angolan economy will expand by 5.2% in 2014 in real terms, from an estimated 4.1% in 2013, driven by a rise in oil production, higher government spending and a steady improvement in agricultural conditions. Despite this, we have made some downward revisions to our growth outlook, believing that certain risks now merit a greater
weighting within our forecasts than had previously been assigned. Plateauing oil revenues, a narrow tax base and heavy public spending will see Angola's fiscal balance remain firmly in the red over the next few years. While persistent under-spending will keep the fiscal deficit in the range of 4.0-6.0% of GDP between 2014 and 2018, we
believe that risks are to the downside.

A steadily eroding trade account surplus will cause Angola's current account balance to decline from an estimated surplus of 6.8% of GDP in 2013 to a marginal deficit of 0.4% of GDP by 2018. Political tensions in Angola are likely to remain relatively elevated over the coming months. Over the last six months, the country's traditionally fractured opposition parties have shown greater unity and been more openly critical of the ruling Movimento Popular de Libertação de Angola (MPLA). Popular anti-government protests, a frequent occurrence since 2011, have assumed a more organised and political edge.


Major Forecast Changes

We have revised down our real GDP growth forecasts for 2014, 2015 and 2016 to reflect the pricing-in of two recurrent downside risks. We now predict that the Angolan economy will expand by 5.2% in 2014 compared to 5.9% previously.

Table Of Contents

Angola Business Forecast Report Q3 2014
Executive Summary. 5
Core Views..5
Major Forecast Changes5
Key Risks To Outlook5
Chapter 1: Political Outlook. 7
SWOT Analysis.. 7
BMI Political Risk Ratings 7
Domestic Politics . 8
Louder Opposition To Keep Tensions High
A more assertive and organised opposition will result in political tensions in Angola being relatively elevated over the coming months,
while speculation over the health of President Jose Eduardo dos Santos will continue.
Table: Political Overview..8
Long-Term Political Outlook 9
Path To Political Inclusion Uncertain And Slow
Although Angola has become one of the largest and fastest-growing economies in Sub-Saharan Africa, its transition over the past
decade has not been complemented by a move towards a more open political system. The concentration of power, both political and
economic, presents the key challenge to economic development and risk to political stability over the coming decade.
Chapter 2: Economic Outlook 13
SWOT Analysis 13
BMI Economic Risk Ratings... 13
Economic Activity .. 14
Growth Outlook Softened As Risks Are Priced In
A recovery in oil production and heavy government spending will keep the Angolan economy on a solid growth trajectory over the
coming years. That said, we have made some downward revisions to our growth outlook, believing that certain risks now merit a greater
weighting within our forecasts than had previously been assigned.
Table: ECONOMIC ACTIVITY..14
Balance Of Payments . 16
Imports To Drive Current Account Into The Red By 2018
Angola's current account balance will decline from a surplus of 6.0% of GDP in 2014 to a deficit of 0.3% by 2018, as high import
demand more than offsets a modest recovery in oil production.
Table: CURRENT ACCOUNT...16
Monetary Policy .. 18
Inflationary Concerns Driving More Cautious Monetary Policy
The Banco Nacional de Angola's decision to keep the benchmark interest rate steady for the sixth straight meeting, despite historically
low inflation, reflects a shift towards a more cautious monetary policy stance on the back of rising inflationary concerns.
Table: MONETARY POLICY18
Fiscal Policy 19
Successive Fiscal Deficits Ahead
Plateauing oil revenues, a narrow tax base and heavy public spending will see Angola's fiscal balance remain firmly in the red over the
next few years. While persistent under-spending will keep the fiscal deficit in the range of 4.0-6.0% of GDP between 2014 and 2018, we
believe that risks are to the downside.
Table: FISCAL POLICY20
Chapter 3: 10-Year Forecast... 23
The Angolan Economy To 2023. 23
New Priorities, Familiar Challenges
Having averaged double-digit rates of real GDP expansion since the end of civil war in 2002, we expect growth in Angola over the
next ten years to come at the more moderate, but still robust level of 6.5% per annum. The successfully implemented fiscal and
macroeconomic reforms of 2009-2012 allied to vast, albeit moderating oil revenues, will support the government in its diversification
efforts, with a major scaling-up of infrastructure investment - both social and economic - at the heart of its plans.
Table: Long-Term Macroeconomic Forecasts23
Chapter 4: Business Environment. 25
SWOT Analysis 25
BMI Business Environment Risk Ratings.. 25
Business Environment Outlook. 26
Institutions... 26
TABLE: BMI BUSINESS AND OPERATION RISK RATINGS26
Table: BMI LEGAL FRAMEWORK RATING.27
Table: LABOUR FORCE QUALITY..28
Infrastructure... 29
TABLE: AFRICA - ANNUAL FDI INFLOWS...29
Table: TRADE AND INVESTMENT RATINGS.30
TABLE: TOP EXPORT DESTINATIONS (USDMN)31
Operational Risk.. 32
Chapter 5: Key Sectors.. 33
Power 33
Table: Electricity Generating Capacity Data And Forecasts...34
Table: Electricity Generating Capacity Data And Forecasts...34
Table: Total Electricity Consumption Data And Forecasts..35
Table: Total Electricity Consumption Data And Forecasts..35
Other Key Sectors... 37
Table: Oil and Gas Sector Key Indicators.37
Table: Pharma Sector Key Indicators37
Table: Autos Sector Key Indicators...37
Table: Telecoms Sector Key Indicators38
Table: Food and Drink Sector Key Indicators.38
Table: Infrastructure Sector Key Indicators...38
Chapter 6: BMI Global Assumptions. 39
Global Outlook. 39
Emerging Market Deceleration39
Table: Global Assumptions.39
Table: Developed States, Real GDP GrowtH, %...40
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %. 40
Table: Emerging Markets, Real GDP Growth, %..41

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