The International Monetary Fund (IMF) on Friday, projected an additional 1.25 percent economic growth for Angola in 2018 compared to the country’s 1 percent growth in 2017.
“The Angolan economy is experiencing a mild recovery. The new administration is rightly focusing on restoring macroeconomic stability and improving governance,” stated the IMF.
Angola’s economy dealt a big blow after its oil price drop in mid-2014 as oil represents about 95 percent of Angola’s export, 1/3. Since then, the country’s economy has been fragile and its struggling to recuperate in the global oil market.
Industrial production in the third quarter of 2017 contracted 2.3% in year-on-year terms, and exports of goods and services also dropped compared to the previous year.
Following the commodity price shock, inflation rose sharply between 2015 and 2016 in the Southern African country. Inflation stood at 22.72 percent year-on-year at the beginning of 2018, and the IMF said it expected inflation to reach 24.75 pct by the end of the year.
The country’s private sector was hurt badly by Forex shortages and rapid decline in its reserves when the National Bank of Angola’s strategy to defend the currency and combat inflation by re-pegging it at 165.9 kwanzas per US dollar was unsuccessful.
According to Ricardo Velloso, IMF division chief for Africa, “Over the medium term, the outlook is for continued gradual recovery in economic activity but there are risks, including a decline in oil prices and slippages in implementation of the structural reforms to promote economic diversification.”