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Angola Country Risk Report Q4 2015

  • August 2015
  • -
  • Business Monitor International
  • -
  • 42 pages

Core Views

Increasing production in Angola's oil sector will help support realGDP growth this year. However, our bearish outlook on oil pricesfollowing their collapse in H214 means we expect a negative impacton other areas of Angola's oil-dependent economy, forecasting realGDP growth at just 2.4% in 2015 and 3.7% in 2016.Angola's current account will record a sustained deficit after the collapsein oil prices has damaged export revenue. Growth in importsand a negative outlook for oil prices will lead to a slow recovery forthe current account, with kwanza weakness to persist as a result.

Social instability in Angola will grow as the population feels the pinchfrom rising prices and cuts in government spending. While this willnot reach the critical mass needed to effect regime change, it willraise concerns over the question of President Jose Eduardo DosSantos' succession.Further inflation growth from a weakening currency will cause Angola'scentral bank to continue its hiking cycle to year-end. However, anyrate hikes will be minimal as the acceleration in prices slows downand the Angolan economy moves away from one-off price shocksseen this summer.

Angola's fiscal budget will record a deficit until 2018 following thecollapse in oil prices in H214. This is despite efforts by the governmentto cut back on both capital and current expenditure and willcause external debt to rise to dangerous levels.Major Forecast ChangesWe have made some major revisions to our forecasts following thestructural move to lower oil prices during the final months of 2014.We now forecast weaker real GDP growth, deeper fiscal and currentaccount deficits and a higher external debt burden.

Table Of Contents

Angola Country Risk Report Q4 2015
Executive Summary 5
Core Views5
Major Forecast Changes5
Key Risks To Outlook5
Chapter 1: Political Outlook 7
SWOT Analysis 7
BMI Political Risk Index 7
Domestic Politics 8
Social Instability Adds Pressure To Succession Questions8
Social instability in Angola will grow as the population feels the pinch from rising prices and cuts in government spending While this
will not reach the critical mass needed to effect regime change, it will raise concerns over the question of President Jose Eduardo Dos
Santos' succession
TABLE: Political Overview 8
Long-Term Political Outlook 9
Path To Political Inclusion Will Be Uncertain And Slow9
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 Index 13
Economic Activity 14
Weak Growth Follows From Oil Price Collapse14
Increasing production in Angola's oil sector will help support real GDP growth this year However, our bearish outlook on oil prices
following their collapse in H214 means we expect a negative impact on other areas of Angola's oil-dependent economy, forecasting real
GDP growth at just 24% in 2015 and 37% in 2016
TABLE: Economic Activity14
Fiscal Policy 16
Revenue Collapse Brings Deficit, Debt16
Angola's fiscal budget will record a deficit until 2018 following the collapse in oil prices in H214 This is despite efforts by the government
to cut back on both capital and current expenditure and will cause external debt to rise to dangerous levels
Monetary Policy 17
Central Bank Weathers The Storm17
Further inflation growth from a weakening currency will cause Angola's central bank to continue its hiking cycle to year-end However,
any rate hikes will be minimal as the acceleration in prices slows down and the Angolan economy moves away from one-off price
shocks seen this summer
TABLE: Monetary Policy17
Balance Of Payments 19
Kwanza Under Pressure As Current Account Deficit Deepens19
Angola's current account will record a sustained deficit after the collapse in oil prices has damaged export revenue Growth in imports
and a negative outlook for oil prices will lead to a slow recovery for the current account, with kwanza weakness to persist as a
result
TABLE: Current Account19
Chapter 3: 10-Year Forecast 23
The Angolan Economy To 2024 23
New Priorities, Familiar Challenges23
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 41 % 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
TABLE: Long-Term Macroeconomic Forecasts23
Chapter 4: Operational Risk 25
SWOT Analysis 25
Operational Risk Index 25
Operational Risk 26
TABLE: Operational Risk26
Market Size And Utilities 28
TABLE: Sub -Saha ran Africa - Market Size And Utilities Ris k 29
Interstate Security Risk 31
TABLE: Sub -Saha ran Africa - Inte rstate Secu rit y Ris k32
Chapter 5: Key Sectors 35
Pharmaceuticals and Healthcare 35
TABLE: Pha rmaceutical Sales , Hist orical Data And Forecasts 36
TABLE: Healthca re Expe nditu re Trends , Hist orical Data And Forecasts 37
Other Key Sectors 39
table: Oil and Gas Sector Key Indicators39
table: Infrastructure Sector Key Indicators39
table: Telecoms Sector Key Indicators40
Chapter 6: BMI Global Macro Outlook 41
Global Macro Outlook 41
China Crisis To Have Far-Reaching Impact41
Table: Global Assumptions41
Table : Devel oped States , Real GDP Growt H, %42
Table : BMI VERSUS BLOO MBERG CON SENSUS REAL GDP GRO WTH FOR ECASTS, % 42
Table : Eme rgi ng Markets , Real GDP Growth , %43

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