from PEDRO AGOSTO in Luanda, Angola
LUANDA, (CAJ News) – THERE are promising signs Angola is shaking off a decline accelerated by the COVID-19 pandemic and upheaval in the global oil markets.
Improved oil revenues, the local Kwanza currency strengthening and the declining inflation indicate the economic revival of Africa’s second largest producer of crude oil.
These factors are also a major boost to the Southern African country as it emerges from the worst drought suffered in four decades.
The Famine Early Warning Systems Network (FEWS NET), in its latest outlook, noted improved oil revenues bolstered the exchange rate of the Kwanza, which traded at an average of Kz406/$ in May, from a record high of Kz660/$ in November 2020.
The agency noted the stronger local currency had lessened the impact of rising global food prices at the national level, which is a reprieve given the high dependence on imported food products.
These include wheat flour, pastas, seed oils, rice, sugar, pork, palm oil and poultry.
The headline annual inflation rate continued to decelerate to 24,4 percent in May, down from 25,8 percent in April.
FEWS NET noted the annual inflation rate for the food and beverage sub-index moderated to 28,8 percent in May from a peak of 34,3 percent in January.
Given ongoing disinflation and a strong Kwanza curbing imported inflation, in May the central bank kept the interest rate at 20 percent.
“An interest rate cut is even possible during the outlook period as inflation continues to moderate from the previous elevated levels,” FEWS NET added.
The agency noted Angola’s current account and the external position improved from the windfall of high global oil prices.
Oil accounts for 95 percent of Angola’s exports.
A current account surplus is expected to reach 12,3 percent of gross domestic product (GDP) this year and strengthen the government’s fiscal position in 2022.
Angola’s current account and external position has improved from the windfall of high global oil prices.
A current account surplus is expected to reach 123 percent of gross domestic product this year, thereby strengthening government’s fiscal position in 2022.
However, some risks remain.
Although oil revenues rose 89 percent this year compared to 2021 levels, future COVID-19 lockdowns and ongoing supply chain disruptions in China, which purchases 70 percent of Angola’s oil, is an example.
Angola’s crude oil production in May dropped moderately to 1,16 million barrels per day (bpd), from 1,18 million bpd in April.
This is attributed to technical difficulties in deep-water oilfields.
The African Development Bank noted Angola’s economy grew by 0,7 percent in 2021 after contracting by 5,4 percent in 2020 after COVID-19 struck.
The International Monetary Fund has projected 3 percent real GDP growth for 2022.
These indicators could be a major boost to the governing People’s Movement for the Liberation of Angola (MPLA) in the August 24 elections. It has been power since independence from Angola in 1975.
Incumbent, Joao Lourenco, was elected in 2017 with a pledge to deliver an “economic miracle.”
– CAJ News