STORY HIGHLIGHTS
- Angola’s first World Bank economic update report provides a snapshot of the economy and includes a special focus on inclusive financial development as a crucial reform to support higher and more diversified growth.
- Angola’s economy recovered strongly in 2024, with real GDP growing by 4.4%. This growth was driven by the recovery of the oil sector and strong dynamism in the non-oil sector, particularly in mining, commerce, and agriculture.
Report Highlights
Angola’s economy recovered strongly in 2024, with real GDP growing by 4.4%. This growth was driven by the recovery of the oil sector and strong dynamism in the non-oil sector, particularly in mining, commerce, and agriculture. Yet, Angola still did not recover the 10.4% loss in real GDP incurred in 2016 – 2020.
Annual GDP growth rates
The weak labor market and high inflation have eroded households’ living conditions, and poverty remains high at around 31.1%. Inequality also remains significant, with a Gini index of 51.3.
Macroeconomic balances have remained sustainable, but there are sources of fragility. The external account improved significantly in 2024, supported by lower refined fuel imports, which helped strengthen international reserves and stabilize the exchange rate. The central bank maintained tight monetary policy to combat inflation, which remained high at 28.2% in 2024, and the real effective exchange rate appreciated sharply.
Public finances deteriorated slightly in 2024, with the fiscal deficit reaching around 1.2% of GDP, despite better revenue. Public debt decreased to 71% of GDP, supported by high nominal GDP growth. High interest payments on public debt, reaching 6.1% of GDP in 2024, crowd out expenditure in key sectors like health, education or social protection.
Economic prospects remain moderate, and risks have increased. Real GDP growth is expected to average 2.9% over 2025 – 27 but will fall short of improving living standards for all Angolans. The fiscal position is projected to slightly deteriorate in the medium term, partly due to the proximity of the electoral cycle. Angola is expected to continue to register current account surpluses, though declining, and the foreign reserves position is projected to remain strong. Risks to the outlook have increased, in a context of high global uncertainty that have resulted in declining oil prices, highlighting the need for Angola to implement reforms to diversify its economy and reduce the reliance on oil.
Chapter 2 of this first Angola Economic Update focuses on inclusive financial development as a crucial reform to support higher and more diversified growth.
Financial inclusion refers to the accessibility and availability of financial services to individuals and businesses, especially those who are underserved or excluded from the traditional banking system. Financial inclusion can empower individuals to make informed financial decisions, boost economic growth, and help reduce poverty.
Experience shows that progress in digital solutions, such as mobile banking, has played a crucial role in expanding financial services to remote areas, making financial inclusion a key driver of economic and social development. MSMEs benefit from inclusive financial systems by gaining the capital needed for growth and innovation.
Despite its oil wealth, Angola faces significant inequality and exclusion, particularly in rural areas where many people lack access to formal banking services. Inclusive financial development fosters economic participation and resilience, and helps drive long-term, sustainable economic progress while breaking the cycle of poverty. When small businesses, farmers, and entrepreneurs have access to banking services, credit, insurance, and other financial tools, they are empowered to invest in entrepreneurship, leading to higher productivity and job creation. Moreover, people can also spend money on education and healthcare. Additionally, financial inclusion reduces income inequality by providing marginalized groups with opportunities to build assets and manage financial risks.
Use of Financial Services
With the rise of digital banking and mobile payment systems, Angola has an opportunity to expand financial services to underserved populations, thereby strengthening economic resilience and fostering inclusive development. With the right reforms, a stronger and more inclusive financial sector can support Angola in diversifying its economy and finding new drivers of growth and job creation. Ensuring broad-based access to financial services beyond Luanda is crucial, at a time where Angola aims to diversify its economy notably through the development of economic activity and value chains in the Lobito corridor and the strengthening of secondary cities.
One major challenge is the limited reach of financial institutions, as many banks are concentrated in urban centers, leaving rural communities underserved. Additionally, high banking costs, stringent requirements for opening accounts, and a lack of financial literacy prevent many Angolans from accessing formal financial services. Weak infrastructure, including limited internet and mobile network coverage in remote areas, also hinders the expansion of digital banking solutions. Furthermore, economic instability, inflation, a lack of trust in financial institutions, and governance issues such as deficiencies in anti-money laundering and combatting the financing of terrorism regulations further hinder the development of the sector. Addressing these barriers through regulatory reforms, digital innovation, and financial education is essential to improve inclusive financial development.