Angola Economic Outlook

Real Gross Domestic Product (GDP) growth is expected to improve substantially in 2012 and 2013 as oil fields come back into operation and new projects begin production.
Angola’s main challenges are to improve the exchange rate system and public financial management.
Unemployment affects chiefly the unskilled but there are a growing number of jobless young graduates.

In 2011 strong growth in the non-oil sector was offset by a decline in oil revenues as a result of lower crude production and exports. Real GDP growth is expected to improve substantially as oil fields come back into operation and new projects start production.

Inflation is expected to fall to single figures in 2013. Angola continued to implement the International Monetary Fund (IMF) Stand-By Arrangement (SBA) programme directed at achieving fiscal and monetary tightening; reforms to improve the exchange rate system, including public financial management; and fiscal transparency. In 2011 the country took measures to overhaul the tax regime; established a debt management unit; and put in place measures to manage and track the flows from the oil sector to the budget. The Central Bank moved from a temporary rationing system to an auction approach and developed a comprehensive strategy for private sector development. A contraction in capital expenditure and better expenditure control during 2011 allowed the authorities to make domestic arrears repayments of USD 7.5 billion, which it had incurred since 2009.

Economic growth and fiscal sustainability are still highly dependent on oil revenues.

However, oil sector activities are capital-intensive and lack linkages to the real economy.

As a result the sector employs less than 1% of the total labour force. This constrains economic diversification and prevents much-needed job creation. The unemployment rate is estimated at around 26% but many jobs are in the informal economy, in agriculture or in street vending. Much unemployment is among the unskilled but there are now also a growing number of unemployed young people with skills that are not tailored to the needs of the country. In spite of steady progress made in improving social conditions the country still faces massive challenges in reducing poverty and unemployment and
in improving human development.