Angola

This report does not constitute a rating action. Overview Institutional and economic profile Flexibility and performance profile Economic recovery will continue, supported by the oil sector and economic and governance reforms. Fiscal and external surpluses, although declining, support the government's liquidity, but external debt servicing costs remain high. --We forecast real GDP growth to average 2.8% in 2023-2026, thanks to gradually improving macroeconomic conditions, albeit from a very weak base, driven by ongoing reforms, falling inflation, and more moderate exchange rate pressure. --Fiscal, debt, and external metrics have improved in the past two years, but tailwinds will moderate as oil prices ease to an average of $90/bbl in 2023 and $80/bbl 2024. --We anticipate oil production to pick up modestly

...Angola's economy continues to benefit from favorable oil sector dynamics along with improvements in non-oil sector prospects (see chart below). Growth, however, comes from a low base following a deep recession in 2016-2021. We anticipate real GDP will recover to Angolan kwanza (AOA) 1.6 trillion (approximately US$2.9 billion) in 2024, levels last seen in 2015. Higher oil revenue and gains from difficult reforms implemented in prior years support our view that Angola's macroeconomic environment is likely to improve gradually, particularly as exchange rate pressures moderate. Domestic inflation fell to 12.55% in January 2023 from about 27% at end-2021, further supporting domestic demand and the currency. This has enabled the central bank, Banco Nacional de Angola (BNA), to cut its key policy rate by 200 basis points (bps) cumulatively since September 2022, and while this is in contrast to global and regional inflationary and monetary policy trends, still-elevated domestic real rates have...

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