By Dipo Olowookere
Consulting company, Fitch Solutions, has disclosed that the Gross Domestic Product (GDP) of Angola will drop to 1.5 percent from the 2.8 percent it earlier projected for the year 2018. The firm attributed this to the growing tendency for the declining trend witnessed in oil production.
“We have now updated our estimates of Angolan GDP growth to 1.5 percent in 2018, a representative difference from the previous 2.8 percent we had anticipated, and we expect GDP to grow by 2.3 percent in 2019, instead of the previous 2.6 percent estimate, whereas for 2020 we’ll estimate it to hit 2.6 percent, which is higher than the previous estimate of 2.2 percent for that year”, Fitch Solutions announced.
On a memo sent to investors, some other Fitch analysts from the consulting company, which have no ties to the analysis in question, have said that “although Angola will be most likely out of the recession trend for the next few quarters, the economic recovery will be weaker than expected previously, mostly due to the decline in oil production in the country.”
The government had estimated GDP growth to arrive at a 2.2 percent threshold, in comparison to the 4.6 percent estimate they’d announced previously, whereas the IMF predicted GDP to get to 2.3 percent this year.
Private consumption and public investment are adding up to the economy and “they shall make the economic growth move positively in the following years, with great potential coming from foreign investment and international financial aid”, said the analysts, referring to a programme being negotiated in October with the International Monetary Fund, which will add €1.5 billion to the state’s treasury.
However, they alert that “in the long-term, the high exposure of Angola to the volatility of the oil sector will put the country under pressure and could induce the GDP growth estimates to go lower.”
The decreasing trend in GDP estimations emerged after “the announcement, by the Office for National Statistics, of data that shows the GDP had decreased by 2.2 percent in the first quarter of the year, after it had already registered a negative growth of 2.6 percent in 2016 and 2.5 percent in 2017”, the analysts also noted.
Data has been updated also to accompany the changes in terms of estimates of oil production, which Fitch announced would go down over the next few years: “A big increase in production is no longer expected, given that the oil wells ready for exploitation will not be as much as desired” they concluded, stating that production is expected to go down by 1.9 percent.
Adedapo Adesanya