Economic growth in Angola is expected to make a major tumble due to sluggish performance of the agricultural sector and temporary drop in oil production.
According to the International Monetary Fund (IMF) projections, Angola’s gross domestic product (GDP) growth in 2014 is expected to plummet to 3.9 per cent from a high of 6.8 per cent recorded in 2013.
“Real GDP growth in 2014 is projected to moderate to 3.9 per cent as the expansion in agricultural output slows from last year’s estimated high growth and because of a temporary drop in oil production during the first half of the year,” said the IMF following the conclusion of the Article IV consultation with Angola.
It added that robust growth in the nonoil economy, mainly driven by a very good performance in the agricultural sector, is expected to offset a temporary but considerable drop in oil production.
Ongoing investments in agriculture are expected to pay off with an increase in agriculture production by about 11.5 per cent. Other sectors such as manufacturing, electricity and services, are also expected to contribute.
Inflation projected to reach 7.5 per cent, which is well within the Banco Nacional de Angola (BNA)’s objective.
The overall fiscal balance, which was in surplus in the last four years, is expected to deteriorate substantially in 2014, reaching a deficit of around four per cent of GDP.
Oil revenue fell by 14 per cent during January-May 2014 mainly due to a 10 per cent decline in oil production related to unscheduled maintenance and repair work in some oil fields. International reserves at the BNA remain adequate at an equivalent of seven months of imports.
Notwithstanding strong economic growth over the past decade, poverty and income inequality remain a challenge.
The 2009 household expenditure survey, released in 2011, shows that Angola’s income distribution is among the most unequal in sub-Saharan Africa, with the top 10 per cent of income earners concentrating one-third of total income, and puts the relative poverty headcount ratio in Angola at 37 per cent (60 per cent in rural areas).
International Monetary Fund (IMF)