Angola’s Economic Recovery and Challenges Ahead
LUANDA – June 20, 2013 - The World Bank Poverty Reduction and Economic Management Team launched today in Luanda, Angola’s capital, the first edition of the Angola Economic Update (AEU). A first of its series, the report is aimed at a wide audience, including policymakers, business leaders, international organizations, and the community of analysts and professionals engaged in Angola’s evolving economy. It analyzes the country’s recent economic developments and situates them in a medium-term global context. It evaluates the implications of macroeconomic trends and policy reforms in terms of the government’s stated development objectives.
The objective of this series is to provide a review of recent developments in the Angolan economy and its evolving prospects for the future. Among some of the conclusions, highlight to the following:
The country is currently experiencing a robust recovery following several years of relatively slow growth in the wake of the global financial crisis. GDP is estimated to have expanded by over 8 percent in 2012, spurred by high oil export prices and rising production volumes; the fiscal and external accounts are enjoying large surpluses and inflation has fallen to single digits. This improvement in Angola’s macroeconomic position reflects the progressive sophistication of its economic governance.
However, Angola’s positive near-term outlook masks a number of key structural weaknesses that pose threats to the sustainability of its current economic growth. Angola remains dependent on oil exports and while oil-export revenues have recently rebounded, the economy remains highly vulnerable to both global price volatility and domestic supply shocks. Meanwhile, the low rate of investment presents a serious concern over the longer-term. In this context, enhancing economic management can help transform Angola’s natural wealth into productive capital and lay the foundation for economic diversification and non-oil competitiveness, which will ultimately be as vital to employment, income and poverty reduction as robust GDP growth.
Each Angola Economic Update will include a Special Focus Section on a subject of particular concern for economic and social development in Angola. In this first edition, the World Bank has focused on the financial sector. Access to finance is essential to the growth of the non-oil economy, particularly manufacturing and agriculture. Yet despite the rapid expansion of the Angolan banking industry over the past two decades, weak financial systems and a lack of reliable financial information are causing distortions in the allocation of credit, ultimately damaging the efficiency and competitiveness of the economy as a whole.