Angola: Economy contracts in Q1
Growth slipped back into negative territory at the outset of the year, according to national accounts data released by Angola’s Statistical Institute (INE) on 18 July. The economy contracted 0.4% on an annual basis in the first quarter, contrasting the previous quarter’s revised 2.6% expansion (previously reported: +2.2% year-on-year).
The all-important Angolan oil sector, which accounts for around one-third of GDP, was chiefly behind the downturn. That said, the decline in output moderated in Q1 and was the softest since Q4 2017, likely thanks to an uptick in global crude prices. This contrasted a sharp deterioration in the manufacturing sector, which contracted markedly in Q1, compared to a robust expansion logged in the previous quarter. Similarly, activity in the financial services sector tumbled in Q1 and, alongside a contraction in the telecommunications and commercial sectors, contributed to the overall drop in GDP. On a more positive note, solid construction activity growth somewhat cushioned the deterioration.
Looking ahead, the economy seems increasingly unlikely to recover from a prolonged recession this year. Although ongoing structural economic reforms and continued financial support from the IMF appear to be bearing fruit, the country’s chronic dependence on the oil sector means falling domestic oil production and uncertain global crude prices are adversely impacting external and fiscal accounts.