Consulting firm BMI improves Angola’s growth rate to 1% this year

Consultancy BMI Research has revised Angola’s growth forecast upward for this year, now forecasting growth to 1%, following 0.5% growth forecast for 2023, with inflation at 17.5%.

“We revised our gross domestic product growth forecast to 1% from 0.6% following better-than-expected results in the third quarter of 2023, which proved the resilience of the non-oil economy,” BMI Research analysts wrote in a report update. macroeconomic scenario for Angola.

In a document sent to investors and to which Lusa had access entitled “Angolan Growth to Remain Weak due to Falling Oil Production and High Inflation”, analysts at the consultancy, which is owned by the same owners of the financial ratings agency Fitch Ratings, write that despite upward revision, “the assessment of weakening consumption remains and exports are expected to continue to fall in 2024, wiping out strong foreign investment.”

In its forecasts, BMI Research forecasts a slight acceleration in GDP as inflation slows, but stresses that lower oil exports will keep GDP growth below the 2010-2014 average of 5.3%.

Economic growth in the third quarter was supported by mining activity, which grew by 41.7% and added 1.1 percentage points to GDP growth, in contrast to a 0.4% fall in oil production in the third quarter, as reported by BMI Research. this is a “modest improvement from the 2.9% decline recorded in the second quarter” last year.

“In 2024, we forecast that oil exports will fall less sharply than in 2023 and that foreign investment will strengthen, but consumption will remain under pressure, keeping growth below the 5.3% average recorded between 2010 and 2014 “, the year of oil. a shock that plunged Angola into a five-year recession.

Growth this year will be supported by increased foreign investment, especially in the oil and gas sector, as well as in the energy and mining sectors.

Private consumption, by contrast, will continue to be pressured by inflation, which BMI Research estimates will increase from 13.6% in 2023 to 17.5% this year due to the impact of rising fuel prices and the strong depreciation of kwanza in the middle of last year. “which is wiping out the purchasing power of families” and also predicts a difficult year in terms of weather affecting crops.

“We therefore expect private consumption growth to slow from an estimated 1.4% in 2023 to 1.1% this year, contributing 0.5 percentage points to GDP growth,” the analysts wrote.

As oil exports fall due to lower oil production, still less than the decline forecast last year, BMI concludes that “net exports are expected to fall 15.6%, down 0.5% percentage points less than GDP growth.”

GDP growth is forecast to accelerate to 1.4% by 2025, “still below growth potential,” with inflation falling to 12.3% and the National Bank of Angola cutting its key interest rate to 17%, which will help growth in loan issuance. and private consumption.