Angola: Economy rebounds in Q2 on firming non-oil activity
The economy returned to growth in the second quarter for the first time since Q2 2019, with GDP expanding 1.2% year-on-year and swinging from the first quarter’s 3.4% contraction. However, underlying economic momentum weakened as activity contracted 2.4% quarter-on-quarter in Q2 (Q1: +0.2% qoq).
The annual improvement came on the back of stellar growth in the fishing, and transport and storage sectors. Output in the financial and real estate sectors also picked up pace. Construction sector activity, meanwhile, contracted at the softest pace since the fourth quarter of 2019. All in all, the non-oil sector grew 7.6% year-on-year in the second quarter, up from the first quarter’s 1.6% expansion. Less positively, the key oil sector, which accounts for roughly one third of GDP, remained in the doldrums as it contracted 12.3% over the same period a year prior (Q1: -18.6% yoy). While this marked the mildest fall since Q3 2020, it constituted the 21st consecutive quarter of declining output.
The economy is forecast to recover somewhat this year from the pandemic-induced downturn. Next year, GDP is projected to expand at a stronger clip as the rollback of restrictive measures should see domestic activity firm, with private consumption benefiting from the release of pent-up demand. Moreover, stabilizing global economic momentum should benefit the external sector. However, the outlook is clouded by elevated inflation and a depreciating currency, as well as regional instability.
Analysts at Banco de Fomento Angola added:
“For the whole of 2021, we expect a GDP increase of between 1.0–1.0%, supported by a complete recovery of the non-oil economy […]. In the opposite direction, the oil economy will see another year of decline […]. For 2022, our expectation is for a certainly higher growth, as the downturn in the oil sector should be smaller, and the non-oil economy may maintain a similar performance, especially if supported by strong public investment.”