Country Economic Forecasts > Angola

The economic climate index moved deeper into contraction territory in H1 2016, suggesting that the economy remains under immense pressure. All the sector-level indices continue to post readings below zero, with confidence lowest in the construction, tourism and trade sectors. The economy's poor performance is mainly ascribed to tight forex liquidity, high inflation, tight monetary policy and fiscal pressures. These factors are now seen dragging GDP growth down to just 0.2% in 2016, from a previous projection of 1.2% in August. Angola's medium-term growth prospects now also look less encouraging. While base effects will kick in next year, forex shortages will see price pressures remain fairly elevated. In turn, aggressive monetary policy easing seems unlikely in the near term. Increased fiscal spending should boost activity, but Luanda's envisaged expansionary stance is highly dependent on external borrowing, and signs that bilateral lenders are tightening credit lines raise the risk of budget revisions next year. GDP growth is forecast to pick up only modestly to 1.2% in 2017 before rising to an average of 3% a year in 2018-19.