Angola Business Forecast Report Q3 2009

Angola faces a tough challenge this year in the form of significantly lower oil prices. Hydrocarbons have fuelled double-digit economic growth in recent years, but with a global recession and reduced oil export revenues underway, more difficult times lie ahead. In the aftermath of the global financial crisis, BMI now sees a 2.5% contraction of the global economy in 2009, and OPEC oil prices averaging US$52.00/bbl. Angola's over-dependence on its energy sector will be exposed as the economy goes into recession for the first time since 1993 and the external position is weakened.

We believe the nation will weather the storm, however, and enjoy a strong bounce back in growth to 5.4% in 2010.

The forthcoming presidential poll in Angola is keeping the incumbent president's attention firmly focused on keeping the electorate happy. In the run up to the election - which looks likely to be postponed until 2010 from September 2009 - President Eduardo Dos Santos is leading a drive to improve housing, which is a particular problem in Angola. Meanwhile, the authorities have been considering their options for external financing amid economic distress, and they are increasingly turning to their strategic ally, China, for support. With China's interest in Angola expanding from the oil sector into agriculture, we expect bilateral ties to continue strengthening, notwithstanding potential negative implications.

On the economic front, we are forecasting a recession of 2.5% in 2009, primarily due to declining oil production. BMI's oil & gas sector team are forecasting oil production averaging 1.80mn barrels per day (b/d) in 2009, down from 1.85mn b/d in 2008. However, reduced government spending and a slowdown in the growth of private investment will also contribute to the economic contraction.

Amid weakened oil revenues and declining foreign reserves, the pressure is on for a further devaluation of the Angolan kwanza. We see scope for a move to AOA80.00/US$ by end-09.

Angola is a difficult place to do business, with corruption and bureaucracy posing considerable challenges for foreign businesses operating in the country. Furthermore, the country's physical infrastructure is war-torn and insufficient. However, improvements are in the pipeline: Namibia and Angola announced in April plans to jointly develop a US$7bn hydropower plant on a river that runs along the border between the two countries. Furthermore, the bay of Luanda is set to receive a US$2bn facelift. The development will include new luxury hotels and public parks built on tracts of land along the city's shoreline.

• Executive Summary
• How Deep Will The Recession Be?
• Chapter 1: Political Outlook
  • SWOT Analysis
  • Bmi Political Risk Ratings
  • Domestic Politics
  • Housing Top of The Political Agenda
  • A Delay to The Forthcoming Presidential Election - Originally Scheduled for September 2009 - Is Looking Increasingly Likely.
  • Foreign Policy
  • China: A Key Ally in Troubled times
  • Angola Is Increasingly Turning to China for Financial Support, amid Economic Distress.
  • Foreign Policy Ii
  • Drc Relations: Cracks Appearing
  • Angola and The Drc Are at ODDS over The Ownership of Angola's Oil Reserves, and The Issue of Enhanced Security Measures at The Shared Border.
• Chapter 2: Economic Outlook
  • SWOT Analysis
  • Bmi Economic Risk Ratings
  • Economic Activity
  • Recession of 2.5% Underway
  • We Are Forecasting A Recession of 2.5% in 2009 in Angola, Primarily Due to Declining Oil Production.
  • Exchange Rate Policy
  • External Debt
  • External Debt Pile Mounting up
  • IT Is Good News That The Angolan Authorities Have Seen Marked Success in Raising Finance from Abroad.
  • Regional Economic Outlook
  • Ssa: Set to Outperform
  • Although Numerous Sub-Saharan African (Ssa) Economies Will Feel The Pinch amidst The Global Recession, The Region Will Remain One of The Best Performing Ones over The Coming Years.
• Chapter 3: 10-Year Forecast
  • The Angolan Economy to 2018
  • Economic Diversification Vital for Long-Term Growth
  • Real Gdp Growth in Angola Is Set to Decline in Tandem with A Slowdown of Growth in Oil Production.
• Chapter 4: Special Report
  • The Outlook for Global Banking
  • Business Environment Rating Outlook
• Chapter 5: Business Environment
  • SWOT Analysis
  • Bmi Business Environment Risk Ratings
  • Business Environment
  • Institutions
  • Infrastructure
  • Market Orientation
  • Operational Risk
• Chapter 6: BMI Global Assumptions
  • Global Assumptions
• List of Tables
  • Table: Politica L Overview
  • Table: Economic Activity
  • Table: Exchange Rate Policy
  • Table: Foreign Debt
  • Table: Long-Term Macr Oeconomic Forecasts
  • Table: Lo An-to-Deposit Ratios, Selected States
  • Table: Lo An Growth (% Chg Y-O-Y), Selected States
  • Table: Commercial Banking Business Environment Ratings, Selected States
  • Table: Bmi Business and Operati Onal Risk Rati Ngs
  • Table: Bmi Legal Framework Rati Ngs
  • Table: Labour Force Quality
  • Table: Middle East & Africa Annua L Fdi Inflows
  • Table: Bmi Trade Ratings
  • Table: Top Export Desti Nati Ons
  • Table: Glo Bal Assumptions
  • Table: Glo Bal & Regional Real Gdp Growth
  • Table: Commodities