2014-01-05 01:11:20 - New Country Reports market report from Business Monitor International: "Angola Business Forecast Report Q1 2014"
We expect economic growth to pick-up over the coming quarters as the government forges ahead with a major public investment programme and oil production is bolstered by new capacity coming onstream. We predict that real GDP growth will come in at 7.3% in 2014, averaging 7.4% annually between 2014 and 2018.
Political tensions have risen sharply in recent months and are likely to remain heightened over the near term as frustration continues to mount at long-serving President Jose Eduardo dos Santos and his ruling MPLA party.
Inflation will remain steady over the course of 2014 - hovering within the 8.0%-9.5% range -anchored by a combination of currency stability and government energy subsidies. Any sustained fall below 8.0% remains unlikely over the near
term given structural bottlenecks.
We believe that government spending - though likely to come in below targeted levels due to capital budget execution issues - will stay elevated. Growth in oil revenues, though staying positive, will not match spending and we predict successive fiscal shortfalls through to 2017.
Full Report Details at
- www.fastmr.com/prod/759019_angola_business_forecast_report_q1_20 ..
Major Forecast Changes
Having previously forecast a budget shortfall equal to 2.7% of GDP in 2013, we now estimate that the deficit is likely to come in at around 2.1% of GDP. The main reason for the revision is lower than projected expenditure.
Drought, project delays and reduced oil output have prompted us to revise down our 2013 real GDP growth estimates to 5.8% from 7.1% previously.
Key Risks To Outlook
Our forecasts, as always, remain subject to the myriad uncertainties associated with oil production and exploration in Angola, along with volatility in global oil prices.
Given that our forecasts only include planned oil projects, the upside potential posed by the country's vast and as yet unexploited sub-salt reserves pose a major upside risk to our forecasts over the mediumto- long term.
Partial Table of Contents:
Major Forecast changes
Key risks to outlook
chapter 1: political outlook
BMi political risk ratings
tensions to remain High as protests Go up a Gear
- Following recent revelations surrounding the Angolan authorities' alleged involvement in the disappearance of two activists in 2012,politicaltensions ave risen sharply and we expect them to remain elevated over the coming months.
Long- term political outlook
path to political inclusion uncertain and slow
- Although Angola has become one of the largest and fastest-growing economies in Sub-Saharan Africa, its transition over the past decade has not been complemented by a move towards a more open political system. The concentration of power, both political and economic, presents the key challenge to economic development and risk to political stability over the coming decade.
chapter 2: economic outlook
BMi economic risk ratings
stronger Growth in 2014, But risks to the Downside
- Following a year of weaker than expected growth in 2013 due to the effects of drought, project delays and reduced oil output, we believe that real GDP growth in Angola will pick-up over the coming quarters. We forecast an expansion of 7.3% in 2014, albeit with risks weighted to the downside.
table: econoMic actiVity
Balance of payments
Massive trade surplus to Keep current account in the Black
- A massive, albeit narrowing, trade surplus will see Angola's current account remain in the black for the duration of our 2014-2018 forecast period. We forecast that Angola's current account surplus will narrow to 5.2% of GDP in 2014 from an estimated 8.7% in 2013.
taBle: current account
Inflation Steady In 2014, But Risks To The Upside
- We expect headline inflation in Angola to remain on a broadly stable path over the course of 2014 underpinned by continued exchange rate stability and significant government subsidies. While we believe that inflationary risks are weighted to the upside, price conditions should remain supportive of mildly accommodative monetary policy.
taBle: M onetary P olicy
Budget in the red, But under-spending a concern
- Elevated spendi g levels will see Angola's fiscal accounts remain firmly in the red over the next few years. We believe that implementation challenges will continue to constrain much-needed investment in human and physical capital. We predict successive fiscal shortfalls in the range of 2.0-4.0% of GDP between 2014 and 2017.
chapter 3: 10-Year Forecast
the angola economy to 2022
- Having averaged double digit rates of real GDP expansion since the end of civil war in 2002, we expect growth in Angola over the next ten years to come at the more moderate, but still robust level of 6.1% per annum. The successfully implemented fiscal and macroeconomic reforms of 2009-2012 allied to vast, albeit moderating oil revenues, will support the government in its diversification efforts, with a major scaling-up of infrastructure investment - both social and economic - at the heart of its plans.
taBle: lonG-terM Macroecono Mic forecasts
chapter 4: Business environment
Full Table of Contents is available at:
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