Economic prospects for Angola were detailed today in Luanda with the release of the first edition of the Angola Economic Report, alongside two additional documents: the Angola Economic Memorandum and the Angola Private Sector Diagnostic.
“In this context, growth is projected to slow down to 2.7% this year, with an average of 2.9% annually between 2026 and 2027. These forecasts assume that the primary driver of growth will be the non-petroleum sector,” highlights the report.
The report emphasizes that Angola must identify new sources of economic growth as the petroleum sector is experiencing a structural decline due to mature fields and decreased investment.
The documents were presented by the World Bank’s senior economist Benedita Baduel, in a session attended by newly appointed Vice President for Eastern and Southern Africa, Ndiamé Diop, and Group Senior Managing Director, Axel Van Trotsenburg, both visiting Angola for the first time.
Benedita Baduel indicated that the weak economic growth in the Portuguese-speaking nation is reflected in unsatisfactory social performance. She noted that job creation has not been sufficient to absorb the growing active population, with most jobs being informal and of “low quality.”
“This is also related to Angola’s poor performance in human capital,” the economist pointed out, noting that the described context, combined with high inflation, has resulted in elevated poverty levels, with “approximately one-third of Angolans living on less than $2.15 per day, the international poverty line.”
The institution’s report states that Angola’s current growth model characteristics are based on a strong dependence on the petroleum sector from a macroeconomic perspective, leading to growth reliant on international prices.
According to the document, out of the $286.5 billion in oil revenues Angola received between 2004 and 2014, less than 10% was saved in reserve mechanisms, negatively impacting expenditure quality, leading to service interruptions and lack of resources for maintenance.
“Furthermore, despite efforts to redirect spending, budget expenditure remains constrained by high subsidies and debt interest payments, to the detriment of essential development areas such as education, health, and infrastructure,” underscored the World Bank’s senior economist.
Regarding Angola’s public debt, Benedict Baduel stated that it is also susceptible to global oil price volatility, especially since about 80% of the debt is denominated in foreign currency, with part comprised of oil-backed loans.
The World Bank predicts that although Angola’s public debt remains sustainable, the government’s financing needs will stay high, considering the public debt profile.
The country remains dependent on imports due to weak domestic production capacity, impacting the balance of payments and monetary policy effectiveness during periods of low oil revenue.
A recent World Bank survey on enterprises reveals that 53% of those that are formal have fewer than 20 employees, and most jobs created in the last decade were in subsistence agriculture and informal trade activities.
