January 14, 2019
According to preliminary national accounts data released by the Statistical Institute (INE) on 14 January, the economy remained in recession in the third quarter of 2018. Nevertheless, despite contracting 1.6% on an annual basis, the third-quarter reading marked a significant improvement from the second quarter’s sharp 4.5% dip (previously reported: -7.7% year-on-year), signaling that the recovery might be underway in 2019.
The all-important Angolan oil sector, which accounts for over a third of GDP, continued to deteriorate, declining 10.6% year-on-year in the third quarter (Q2: -8.4% yoy). In addition, the extraction of diamonds and other minerals fell 16.5% year-on-year in Q3, compared to a -6.1% drop in the previous quarter, while the agricultural, transport and fisheries sectors also posted annual contractions in the same quarter. On a more positive note, the manufacturing sector return to expansion in the quarter (Q3: +6.2% yoy, Q2: -8.0% yoy).
On a more positive note, on 7 December the IMF approved a USD 3.7 billion credit facility for Angola to support the Macroeconomic Stabilization Program. The program has three main goals: fiscal consolidation, which should help bring government debt to safer levels; greater exchange rate flexibility to regain competitiveness; and reducing inflation. The approval allowed for an immediate disbursement of around USD 990 million, with the rest of the funds scheduled to be phased in over a period of three years, subject to half-yearly reviews. Against this backdrop, growth is expected to resume this year, amid falling inflation and improving non-oil sector activity, before picking up further in the medium-term.
Author: Almanas Stanapedis, Economist