Angola flag Angola: Economic and Political Overview

The economic context of Angola

Economic Indicators

Among the largest oil producers in Africa, Angola also boasts the third-largest GDP in sub-Saharan Africa (IMF). However, economic growth is susceptible to significant fluctuations, depending on oil production and price levels. After growing 3% in 2022, the IMF estimated a GDP increase of only 1.3% in 2023 amid lower oil production. Moreover, higher inflation dampened consumption and the import of goods, weighing on non-oil economic activity. According to the IMF’s latest estimates, GDP growth is expected to accelerate to 3.3% in 2024 and remain stable in the medium term, thanks to structural reforms supporting the non-oil sector.

The general government deficit was estimated at 1.2% of GDP in 2023, following a surplus one year earlier (+0.2%). The government foresees an improvement in the upcoming years driven by a 50% reduction in gasoil subsidies in 2024 and a further 25% reduction in 2025. In 2023, the IMF projected that Angola's general government debt would rise to 84.9% of GDP, compared to 66.7% in 2022. This increase was influenced by the depreciation of the kwanza and its impact on the government's substantial foreign-currency debt holdings. The debt ratio is expected to decrease to 77.1% and 67.9% of GDP in 2024 and 2025, respectively, reflecting nominal GDP growth and primary budget surpluses. Additionally, the interest/revenue ratio is forecasted to be relatively high at 23.9% in 2024 (Fitch Ratings). The IMF anticipates that inflation will average 22.3% in 2024 and 18.1% in 2025, compared to an estimated 13.1% in 2023. This projection is attributed to the depreciation of the kwanza and the continued implementation of reforms regarding gasoil subsidies.

President Joao Lourenço initiated numerous reforms aimed at reducing the influence of the dos Santos family on the economy, improving the perception of the business climate, and addressing the country's crisis, but the social situation in Angola remains tense. Inequalities and inflation are fueling dissatisfaction among the population. Only a third of the population has access to electricity, and although income per capita has been gradually increasing, especially in metropolitan regions, poverty and unemployment rates remain high. According to the latest figures from the World Bank, the unemployment rate stood at 14.5% at the end of 2022. In 2023, the government approved the creation of the National Employment Fund in Angola (Funea), which already had EUR 44.3 million available for the year, to mitigate unemployment, mainly among youth.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 122.7893.8092.9396.90100.79
GDP (Constant Prices, Annual % Change) 3.01.33.33.43.5
GDP per Capita (USD) 3,4382,5502,4532,4832,507
General Government Balance (in % of GDP) 0.3-1.20.30.10.3
General Government Gross Debt (in % of GDP) 66.784.977.167.961.0
Inflation Rate (%) n/a13.122.318.110.1
Current Account (billions USD) 11.762.883.472.591.80
Current Account (in % of GDP) 9.63.13.72.71.8

Source: IMF – World Economic Outlook Database, October 2021

Main Sectors of Industry

Despite its potential, the agricultural sector in Angola remains underdeveloped and not very productive, contributing to 13.6% of GDP but employing 56% of the population (World Bank). Only about a third of Angola's arable land is utilized for harvests, and out of those, merely 100,000 out of 5 million arable hectares benefit from machinery and/or animal traction for sowing and harvesting. Angola's agriculture mainly consists of subsistence farming, with key industrial crops being coffee and cotton. The government has heavily invested in coffee, sugarcane, and ethanol productions to diversify agricultural revenues and exports. As outlined in the National Development Plan 2023 - 2027, the Angolan Government has identified two main drivers to unlock the nation's agricultural capacity: the National Grain Plan (PLANAGRÃO) and the National Plan for the Promotion and Development of Livestock (PLANAPECUÁRIA). These initiatives aim to address the increasing need for food imports, specifically cereals for human and animal consumption, as well as poultry.

The industrial sector represents 44.9% of GDP and 6% of employment (World Bank). Angola stands as one of Africa's largest oil producers, a net producer of natural gas, and the third-largest producer of diamonds on the continent, surpassed only by Botswana and the Democratic Republic of Congo. The Angolan economy, the third-largest in sub-Saharan Africa, is dominated by the oil and gas industry, which accounts for about 30% of its GDP and is the primary revenue source for the country (with more than 70% of government revenue and 90% of Angola's exports coming from oil activities). In addition to diamonds, the country also produces gold, granite, gypsum, marble, and salt, with numerous undeveloped minerals with potential for extraction, including beryllium, clay, copper, iron-ore, lead, lignite, manganese, mica, nickel, peat, phosphate rock, quartz, silver, tungsten, uranium, vanadium, and zinc. According to the National Oil, Gas, and Biofuels Agency (ANPG), Angola produced 400.72 million barrels per day (bpd) in 2023, positioning the country as the third-largest oil producer in Africa. Angola aims to sustain production at 1.18 million bpd throughout 2024.

The services sector (banking, communication, tourism) is also experiencing rapid growth, accounting for 41.6% of GDP and employing 38% of the population. Although tourism is growing, there is a severe shortage of hotels and other types of accommodation. The construction sector is booming, comprising around 9% of GDP, driven by a large reconstruction program launched by the government. Telecommunications has seen significant growth, propelled by increased mobile phone penetration and investments in infrastructure. Banking and finance play a crucial role in supporting Angola's economy, with both domestic and international financial institutions operating within the country.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 58.7 7.8 33.5
Value Added (in % of GDP) 13.6 44.9 41.6
Value Added (Annual % Change) 3.9 1.8 4.2

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:
54,2/100
World Rank:
140
Regional Rank:
30

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
3.50/10
World Rank:
80/82

Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024

 

Country Risk

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Sources of General Economic Information

Ministries
Ministry of Finance
Ministry of Economy and Planification
Ministry of Energy and Water
Ministry of Mineral Ressources and Oil
Ministry of Fishing
Statistical Office
National Statistics Institute
Central Bank
Banco Nacional de Angola
Stock Exchange
Bolsa de Divida e Valores de Angola
Economic Portals
Portal de Angola
 

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Latest Update: March 2024