Angola: Economic sentiment improves in Q1
June 12, 2019
The economic climate indicator (ICE, Indicador de Clima Económico) published by the Statistical Institute improved from minus 12 points in Q4 2018 to minus 9 points in Q1 2019. In turn, economic sentiment remained firmly entrenched in negative territory at the outset of this year, where it has been since Q2 2015. Nevertheless, the first-quarter result marked the best reading in three-and-a-half years, signaling that economic recovery observed in the final quarter of 2018 likely carried over into this year.
The first-quarter improvement was largely driven by solid confidence gains in the manufacturing, extractive and communication industries. Furthermore, sentiment in the tourist sector ticked up from the previous quarter in Q1, contrasting a slight deterioration in the commercial sector. Meanwhile, confidence in both transport and construction sectors weakened markedly in Q1. Overall, just two out of seven surveyed sectors—communications and extractive—were in positive territory as well as above their respective long-term average levels in Q1. Notably, confidence in the all-important commercial and construction sectors remained deeply entrenched in negative territory in Q1.
Looking ahead, despite recent signs of recovery, partly thanks to ongoing economic reforms, the Angolan economy still faces strong headwinds: The economy’s chronic dependence on the oil sector continues to weigh on the country’s outlook, against the backdrop of extremely volatile global crude oil prices and shrinking domestic production levels.
Author: Almanas Stanapedis, Economist