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Angola Business Forecast Report Q4 2014

  • September 2014
  • -
  • Business Monitor International
  • -
  • 40 pages

Core Views
We forecast that real GDP growth in Angola will average 5.1% annually
between 2014 and 2018, with the non-oil sector the main driver
of growth. High levels of government spending on infrastructure
and oil exploration and development underpin strong growth in the
construction, energy and transport sectors.
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. We predict that the country will sustain a sizeable
fiscal shortfall – in the range of 6.0-8.5% of GDP – over 2014-2018.
The current account balance will steadily deteriorate over the next
five years to stand at 0.7% of GDP by 2018, from an estimated 7.9%
of GDP in 2014.
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. Popular
anti-government protests, a frequent occurrence since 2011, have
assumed a more organised and political edge.

Major Forecast Changes
We have made some adjustments to our forecasts for economic
growth in Angola. We now forecast growth of 4.4% in 2014 and 5.5%
in 2015, compared with projections of 5.2% and 5.5% previously.

Table Of Contents

Angola Business Forecast Report Q4 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
Banking Problems Reflect Wider Governance Concerns...8
The collapse of Banco Espirito Santo Angola, the Angolan unit of Portuguese bank Banco Espirito Santo, has sent jitters through the
country's financial sector and reinforced long-standing concerns over governance standards within the industry.
Table: Political Overview..8
Long-Term Political Outlook 9
Path To Political Inclusion Uncertain And Slow...9
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
Strong Growth, But Unreliable Oil Production Poses Persistent Risk.14
Weaker-than-expected oil production through H114 has prompted us to revise down our real GDP growth forecasts for 2014 and
2015, though our broad outlook is unchanged. Public investment in infrastructure, burgeoning consumer spending and a recovery in oil
production will see economic growth average 5.1% annually between 2014 and 2018.
Table: Economic Activity..14
Balance Of Payments . 15
Weak Oil Production, High Imports To Squeeze C/A Surplus...15
Angola's current account balance will decline from a surplus of 7.9% of GDP in 2014 to just 0.7% by 2018 as high import demand more
than offsets a modest recovery in oil production.
Table: Current Account...16
Monetary Policy .. 17
Monetary Policy To Remain Accommodative17
The Banco Nacional de Angola's decision to keep the policy rate steady at 8.75% is in line with our view that contained inflation and a
desire to stimulate credit growth will see the bank maintain an accommodative stance over the coming quarters.
Table: Monetary Policy18
Fiscal Policy 18
Fiscal Health To Deteriorate18
Plateauing oil revenues, a narrow tax base and heavy public spending will see Angola's fiscal balance remain firmly in the red over the
coming years. We predict that the country will sustain a wide fiscal deficit in the range of 6.0-8.5% of GDP over 2014-2018.
Table: Fiscal Policy19
Chapter 3: 10-Year Forecast... 21
The Angolan Economy To 2023. 21
New Priorities, Familiar Challenges...21
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 10 years to come in at a more moderate but still robust level of 6.5% per annum. The successfully implemented fiscal and
macroeconomic reforms of 2009-2012, in combination with 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 Forecasts21
Chapter 4: Business Environment. 23
SWOT Analysis 23
BMI Business Environment Risk Ratings.. 23
Business Environment Outlook. 24
Institutions... 24
TABLE: BMI BUSINES AND OPERATION RISK RATINGS24
Table: BMI LEGAL FRAMEWORK RATING.25
Table: LABOUR FORCE QUALITY..26
Infrastructure... 27
TABLE: AFRICA - ANNUAL FDI INFLOWS...27
Table: TRADE AND INVESTMENT RATINGS.28
Market Orientation... 29
TABLE: TOP EXPORT DESTINATIONS (USDMN)29
Operational Risk.. 30
Chapter 5: Key Sectors.. 31
Pharmaceuticals and Healthcare... 31
Table : Phar maceutical Sales , Historical Data And Forecasts 32
Table : Pri vate Healthcare Expenditure Trends , Historical Data And Forecasts ... 33
Table : Govern ment Healthcare Expenditure Trends , Historical Data And Forecasts . 33
Table : Healthcare Expenditure Trends , Historical Data And Forecasts 33
Other Key Sectors... 37
Table: Oil and Gas Sector Key Indicators..37
Table: Telecoms Sector Key Indicators37
Table: Infrastructure Sector Key Indicators...37
Table: Food and Drink Sector Key Indicators..38
Table: Autos Sector Key Indicators...38
Chapter 6: BMI Global Assumptions. 39
Global Outlook. 39
Eurozone Downgrade On Poor Q214..39
Table: Global Assumptions.39
Table : Developed States , Real GDP Growt H, %...40
Table : BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %. 40
Table : Emerging Mar kets , Real GDP Growth , %..41

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