Angola: Economic sentiment slips in Q3
December 13, 2019
The economic climate indicator (ICE, Indicador de Clima Económico) published by the Statistical Institute weakened to minus 7 points in the third quarter from minus 5 points in the second quarter, which had marked the best reading in four years. The result marked the first deterioration following three consecutive quarters of improving sentiment, suggesting that the economy is unlikely to emerge from recession in the quarter.
The third-quarter deterioration was chiefly driven by marked downturns in the commercial and construction sectors, with confidence in both sectors slipping deeper into negative territory as well as further below the respective long-term average levels. Furthermore, sentiment in the transport sector slipped into negative territory in Q3, while confidence in the communications sector weakened, although it remained entrenched in positive terrain in Q3. On a more positive note, mining confidence moved further into positive territory and above its long-term average level in Q3, whereas sentiment in the manufacturing sector improved notably but remained entrenched in negative territory as well as below its long-term average. Lastly, confidence in the tourism sector improved marginally in Q3.
Looking ahead, fourth-quarter prospects remain bleak, amid plummeting domestic oil production and volatile global crude prices. Economic activity should recover in 2020, however, as ongoing economic reforms, sustained political stability and continued IMF assistance are set to support consumer demand and investment activity. That said, external headwinds and weak domestic oil production are set to limit the recovery.
Author: Almanas Stanapedis, Economist