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Country Report Angola February 2013

  • Publication Date:February 2013
  • Publisher:EIU
  • Product Type: Report

Country Report Angola February 2013

Outlook for 2013-17

  • The ruling party, Movimento Popular de Libertação de Angola (MPLA), is set to maintain its domination of the political system, by virtue of its control of government resources and overwhelming majority in the National Assembly.
  • The long-serving president, José Eduardo dos Santos, may step down during this term and hand over power to the former Sonangol chief, Manuel Vicente.
  • Emboldened by the improvement in their performance at the August 2012 election, opposition parties will switch their attention to the long-delayed municipal elections, which are unlikely to take place before 2015.
  • A rise in oil output and investment will drive average real GDP growth of 6.3% in 2013-17. We forecast that crude output will rise from an average of 1.75m barrels/day (b/d) in 2012 to 2.23m b/d in 2017.
  • Inflation slowed to a multi-decade low of 9% in December. Assuming that structural measures gradually address underlying distortions, we expect inflation to decline further and to remain in single digits in 2013-17.
  • Owing to high oil prices, the current-account surplus was estimated at 12% of GDP in 2012. Despite high oil revenue, rapid import growth driven by capital spending will erode the current-account surplus to 2.1% of GDP in 2017.

Review

  • The largest opposition party, UNITA, appointed the son of the late Angolan rebel leader, Jonas Savimbi, to lead its urban mobilisation campaign. This signals UNITA's combative mood and could lead to more street protests.
  • Angola's parliament has begun to debate the draft 2013 budget, which projects the first budget deficit since 2009; quasi-fiscal operations from Sonangol, the state oil company, are being moved to the central budget.
  • The central bank lowered the benchmark interest rate to 10% on January 28th, in the first change in the rate for a year. The 25-basis-point cut was expected, as inflation fell to a multi-decade low of 9% in December 2012.
  • The IMF has revised its real GDP estimate for 2012 upwards, to more than 8%, from 6.8% previously. Economic activity was boosted by a recovery in oil production, as well as a robust expansion of the non-oil sector.
  • Crude oil production in 2012 was 1.75m barrels/day (b/d), up by 5.4% from 1.66m b/d in 2011. The short-term hydrocarbons outlook is bright, but a global oil supply glut in the medium term could damage the Angolan economy.
  • Chevron has announced that it will proceed with the US$5.6bn development of the Mafumeira Sul oil project. The project is expected to start production in 2015 and to pump 111,000 b/d of oil and 10,000 b/d of liquefied natural gas.

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