Angola: Economy returns to growth in Q4 2018
The economy returned to growth in the final quarter of 2018, according to national accounts data released by the Statistical Institute (INE) on 17 April. The economy expanded 2.2% on an annual basis in Q4, rebounding solidly from a poor third-quarter outturn (Q3: -1.6% year-on-year). However, for the year as a whole, GDP still shrank 1.2%, more severely than the 0.1% contraction logged in 2017.
The all-important Angolan oil sector, which accounts for a third of GDP, continued to deteriorate as output tumbled 9.6% year-on-year in Q4. That said, the decline was somewhat softer than that recorded in Q3 (Q3: -11.6% yoy). This, alongside the sharp pick-up in activity in the construction and commerce sectors compared to their near-stagnant growth in Q3, was largely behind the fourth-quarter upturn.
Looking ahead, the economy is expected to exit its three-year long recession this year, mainly on the back of more upbeat domestic demand. Angola is also undergoing reforms to address macroeconomic imbalances as part of the IMF loan program approved back in December, which should also bode well for near-term prospects. The economy’s high dependence on the oil industry remains a major downside risk to the outlook, however, as potential disruptions in production and/or lower oil prices would adversely impact external and fiscal accounts.