GDP in Angola

Angola GDP

GDP growth records slowest increase in two years during Q1

GDP growth slowed markedly to 0.3% year on year in the first quarter, from 2.6% in Q4 2022. Q1’s reading marked the worst result since the first quarter of 2021.

The all-important oil sector contracted at a sharper rate of 8.0% in Q1 (Q4: -5.0%). Oil output was dented by maintenance work in the Dalia offshore field, which started in mid-February.

Meanwhile, growth in the non-oil sector decelerated to 3.1% in Q1 from 5.2% in Q4. The slowdown was largely broad-based, with output in the agriculture, industrial and services sectors expanding at a softer rate.

On a seasonally adjusted quarter-on-quarter basis, GDP dropped 1.1% in Q1, contrasting the previous quarter’s 0.2% increase. Q1’s reading marked the sharpest decrease since Q2 2021.

In Q2, the economy likely gained some traction. In April–May, inflation softened, while crude output averaged above Q1 levels. That said, the kwanza plummeted in May–June, as the Angolan Treasury abstained from making FX sales in April and May amid declining oil revenues stemming from reduced output and lower Brent prices in Q1 relative to last year. In addition, a reduction in fuel subsidies from June likely weighed on activity, in addition to spurring widespread protests in recent weeks. These factors will exert upward pressure on inflation heading into H2. Oil prices, treasury interventions, the path of action of the Central Bank and the evolution of the El Niño weather phenomenon are the key factors to watch during the remainder of the year.