Country Forecast Angola December 2017 Updater

Country Forecast Angola December 2017 Updater

  • December 2017 •
  • Report ID: 358861 •
  • Format: PDF


  • The new president, João Manuel Gonçalves Lourenço, has shown a greater than previously expected appetite for reform, and continues to seek to marginalise members of the family of his predecessor, José Eduardo dos Santos. However, Mr Lourenço will continue to face resistance from vested interests, and Mr dos Santos will retain at least one important means of control-his leadership of the ruling Movimento Popular de Libertação de Angola (MPLA).
  • Opposition parties will seek to use their enhanced parliamentary presence to hold the government to account and to increase their profile with the electorate. However, the MPLA is likely to maintain its political dominance by virtue of its control of government resources and the loyalty of the security forces, and is well placed to win another (albeit smaller) majority at the next poll, in 2022.
  • Political pressure will rise as the government is forced to pursue tighter fiscal policies, because of oil prices that remain well below 2011-14 levels. This will bring the risk of increased social tensions, particularly given that public expectations of change under the new president are substantial. To avoid stoking further public discontent, the government will seek to balance austerity measures with moves such as a rise in the minimum wage, public-sector pay increases and actions to protect the local jobs market. The public finances are likely to remain in deficit throughout the forecast period.
  • Ongoing hydrocarbons investment will provide a modest boost to overall oil output and support real GDP growth, but given relatively low oil prices, we forecast that growth will average just 2.6% a year in 2018-22.
  • The introduction from early 2018 of a new, less protectionist, customs regimes should lessen inflationary pressures. In addition, after substantially elevated inflation in 2016-17, a cautious monetary policy stance by the central bank should help to keep the average annual inflation rate on a downward trend in 2018-22, although the rate is likely to remain in double digits until 2020 given continued depreciation of the kwanza.
  • Notwithstanding the boost to reserves provided by continued international loans, the kwanza will remain under pressure in the low oil price environment. A substantial official devaluation is possible; without this, the gap between the official and parallel-market rates will remain substantial.
  • The current-account balance will remain in deficit throughout the forecast period, reflecting oil price trends and substantial deficits on the services and income accounts.






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