Angola: Economy rebounds in Q3 on firming non-oil activity
National accounts data for the third quarter showed that the economy expanded 0.8% year-on-year, rebounding from the second quarter’s revised 0.2% contraction. This marked the best result since the fourth quarter of 2018. The economy remained notably below pre-pandemic levels despite firming underlying momentum, with GDP growing 0.5% on a seasonally-adjusted quarter-on-quarter basis in Q3, swinging from the second quarter’s 3.5% contraction.
The annual rebound was driven by firming activity in the non-oil sector, with output in the manufacturing, electricity and water, trade, and transport and storage sectors accelerating. Moreover, growth in the agricultural and forestry, and fishing sectors remained robust despite easing somewhat, while activity in the construction sector swung from a contraction in the second quarter to a solid expansion in Q3.
On the other hand, the key oil sector, which accounts for roughly one third of GDP, remained in the doldrums. Output in the oil sector fell 11.1% over the same period a year prior. This followed the 12.1% contraction recorded in Q2 and marked the 23rd consecutive period of declining output. All in all, the oil sector subtracted 4.7 percentage points from the headline reading in the third quarter, worsening from the 0.3 percentage-point deduction recorded in Q2.
Turning to this year, economic growth is forecast to pick up pace compared to last year’s sluggish recovery. The rollback of restrictions should support the domestic economy, and the unleashing of pent-up demand will further buoy household spending. Normalizing global economic conditions are expected to aid the external sector, but the outlook is clouded by elevated inflation amid a depreciating currency, and regional instability as well as a subdued oil sector.
Analysts at the EIU added:
“Oil production will continue to decline in 2022–23, making the oil sector a poor source of real economic growth in the short term, despite global oil price rises anticipated in 2022, and output growth will remain below population growth. We expect the oil sector to contribute to real economic growth in 2024–26 as output from new blocks begins to be realised.”