Country Forecast Angola April 2018 Updater

Country Forecast Angola April 2018 Updater

  • April 2018 •
  • Report ID: 486616 •
  • Format: PDF


  • The new president, João Lourenço, has shown a greater than previously expected appetite for reform, and has in effect marginalised members of the family of his predecessor, José Eduardo dos Santos. However, Mr Lourenço will continue to face resistance from vested interests, particularly as regards efforts to eradicate corruption, and Mr dos Santos retains at least one important means of control-his leadership of the ruling Movimento Popular de Libertação de Angola (MPLA). He is due to step down from this position in 2018; an attempt to stay on in the post would lead to increased tensions within the MPLA.
  • Opposition parties will seek to increase their profile with voters through their enhanced parliamentary presence, and this could see them take control of parts of the country at municipal elections, due to be held before 2022. However, given its control of government resources, the MPLA is well placed to win another (albeit smaller) majority at the next national election, 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. 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 2.4% a year in 2018-22.
  • The devaluation of the kwanza in early 2018 will increase inflationary pressures, while the planned (and phased) introduction of value-added tax (VAT) from 2019 will add to these. Although a cautious monetary policy stance by the central bank should act as a partial counterweight, the annual average rate is likely to remain in double digits throughout the forecast period.
  • Although the kwanza has lost around one-quarter of its value against the US dollar since the authorities abandoned the dollar peg, it will remain under pressure in the low oil price environment, and the gap with the parallel-market rate will remain wide. Further substantial value losses are likely in 2018.
  • 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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