Angola: Economic sentiment improves to four-year high in Q2
The economic climate indicator (ICE, Indicador de Clima Económico) published by the Statistical Institute improved from minus 9 points in the first quarter to minus 5 points in the second quarter. Nevertheless, the index remained entrenched in negative territory, where it has now been for four years. That said, the second-quarter reading marked the third consecutive quarter of improving sentiment and the best result since Q2 2015, suggesting that a more sustained economic recovery might be underway.
The second-quarter improvement was largely broad-based. Sentiment in the mining, communications and transport sectors rose and was in positive terrain in Q2. On top of that, confidence in both the commercial and the construction sectors improved considerably in the second quarter, although it remained deeply entrenched in negative territory as well as below the respective long-term average levels. On a less positive note, sentiment in the all-important manufacturing sector plunged sharply, falling down further into negative territory in Q2, amid faltering future production expectations, and weighed on the overall second-quarter result. Meanwhile, confidence in the tourism sector remained unchanged from the previous month in Q2.
Looking ahead, the economy seems increasingly unlikely to recover from a prolonged recession this year. Although ongoing structural economic reforms and continued financial support from the IMF appear to be bearing fruit, the country’s heavy dependence on the oil sector means falling domestic oil production and volatile global crude prices are adversely impacting external and fiscal accounts.