Reforms in Angola Expected to Boost the Economy
Financial experts anticipate another two years of recession in Angola and are predicting rate drops of -2.2% this year and -1.9% next year. According to forecasts by Economist Intelligence Unit (EIU), this drop will be followed by the economic growth of around 2.5% from 2021 onward. An increase of 4.1% is expected for 2022, rising to 5.0% in 2023. This welcome improvement will be the result of the positive progress and investments made in industries outside of the oil sector.
How the Oil Sector is Affecting Investment in Angola
Analysts of the EIU refer to economic reforms in the oil sector that were presented by the new government of Angola. The goal of these reforms is to draw investment in exploring new deposits, however, this type of activity is bound to take several years to deliver and falls outside of the time period being analysed. In 2018, oil production fell by close to 10%. This was because of a shortage of investment and the depletion of some of the country’s oil wells. Despite the introduction of several tax incentives, Angola continues to struggle to attract international investment. Consequently, it is anticipated that Angola’s oil production will continue falling in the next couple of years and remain below the production quotas agreed by OPEC countries.
If Not in the Oil Sector, Where Will the Economic Growth Come From?
Analysts confirmed that economic growth of an average of 3.9% per year for the next couple of years is expected. The reason behind this growth is developments and reforms made in industries like agriculture, construction, the services sector and mining. Efforts have also been made by the Angolan government to address challenges in the business environment due to the decline in the oil industry.