Economy picks up pace in the first quarter

Growth remains robust by pre-pandemic and regional standards: The economy started 2025 on a strong footing, expanding 3.5% year on year in Q1. This marked an acceleration from Q4 2024’s downwardly revised 2.6% rise and remained above the pre-Covid decade average of 2.5%, likely broadly matching the sub-Saharan African average. On a seasonally adjusted quarter-on-quarter basis, economic activity returned to growth, increasing 2.3% in the first quarter and contrasting the prior quarter’s 0.3% decline.

Economy is yet to fire on all cylinders: The year-on-year result reflected improving non-oil output, which expanded 5.7% in Q1 (Q4 2024: +3.3% yoy). Construction activity picked up pace, while domestic trade growth rose to a near three-year high, supporting the upturn. The agricultural sector also gained traction, with a recovery in crops outweighing softer momentum in fishing; the government closed a key fish trading port in Q1 due to cholera risk. Meanwhile, mining and quarrying continued to expand at one of the strongest clips this century—though growth eased slightly from Q4 2024—benefiting from the activation of the Luele diamond mine in late 2023. Less positively, the hydrocarbons sector—which accounts for around half of GDP and over 90% of export revenue—shrank 4.4% in the first quarter, deteriorating from the prior quarter's 0.2% decline. Crude output in Q1 fell around twice as fast as in Q4 2024.

Oil sector woes to permeate through the economy ahead: Our panel sees economic growth remaining around Q1’s pace in Q2, likely benefiting from resilience in non-oil activity. Still, inflation should stay among the fastest in the region, while interest rates are set to remain near recent multi-year highs in Angola through Q4, which should keep a lid on overall momentum. Moreover, rising U.S. protectionism has cast a shadow over the outlook, depressing the demand outlook for diamonds—the U.S. is the world’s top buyer—and, more crucially, for hydrocarbons, Angola’s key expert, already feeling the pinch of maturing oil fields after years of underinvestment. As a result, in 2025 as a whole, our Consensus is for GDP growth to decelerate from 2024, hovering around the pre-pandemic decade average.

Panelist insight: EIU analysts said: “We expect oil production to stagnate in 2025 […] due to maintenance works on maturing wells alongside a structural decline in foreign direct investment into the energy sector. Angola's oil sector is interlinked with other services, such as transport, insurance and financial services, and we expect slowing oil sector growth to weigh on aggregate demand. Accordingly, we have revised down our economic growth forecast for 2025”.

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