Angola: GDP drops at milder pace in first quarter of 2021
July 15, 2021
Economic conditions remained challenging in the first quarter of 2021, with GDP contracting 3.4% year-on-year amid the lingering impact of the Covid-19 pandemic. That said, the result was above the 5.5% fall logged in the final quarter of 2020.
Looking at the details of the release, Q1’s improvement largely reflected a pickup in activity in the mining and commerce sectors in Q1. Moreover, the construction sector contracted at a more moderate pace in the quarter compared to Q4 2020. Less positively, the performance of the key oil sector—which accounts for roughly one third of GDP—deteriorated: Output dropped 18.6% in Q1, worsening from the 11.8% fall recorded in Q4 2020. The sector likely suffered from softer demand as countries globally tightened restrictions to curb the spread of Covid-19 in the quarter. Meanwhile, output growth in the fishing and agricultural sectors slowed in Q1, while activity in the transport and storage sector declined at a quicker pace compared to the prior quarter.
GDP is projected to bounce back to growth this year: The global vaccine rollout and the subsequent easing of restrictions should unleash pent-up demand. That said, the recovery will be mild, as the balance of risks remains tilted to the downside, as uncertainly remains over the efficacy and availability of vaccines, casting doubt over the strength of the global recovery. Moreover, the depreciation of the currency and elevated inflation pose further risks to the outlook.
Author: Marta Casanovas , Junior Economist