Angola is a Southern African nation. Officially the Republic of Angola, a vast country with a long coastline and central plateau. Angola has vast mineral and petroleum reserves, and its economy is among the fastest-growing in the world – but economic growth is highly uneven. Much of its oil wealth lies in its separate Cabinda province.
Historically, colonial policies favoured the growth of large Portuguese-owned estates producing export crops and discouraged production of any but subsistence crops on the small holdings of the majority of the rural population. Rural people were subjected to various schemes of forced and contract labour to provide workers for the estates. Only about 3 percent of the land area was under cultivation, with less than 1 percent irrigated. Coffee was of greatest importance, with production concentrated in the Malanje highlands and along the northwestern margins of the Bié Plateau near the centre of the country.
However, prior to independence, Angola supplied almost one-fifth of world coffee production, with an annual output of more than 200,000 tons in the early 1970s. Cotton, sisal, and corn (maize) were also important cash crops, while cassava (manioc), millet, sorghum, and rice were grown as subsistence crops, and livestock such as goats, pigs, and chickens were also kept for subsistence. Angola’s economic fortunes have been tied to global oil demand, which brought volatile growth and left the country with high levels of poverty and inequality. Reforms over the past five years have improved macroeconomic management and public sector governance. Macroeconomic stability has been enhanced through a more flexible exchange rate regime, central bank autonomy, sound monetary policy, and fiscal consolidation, according to IMF.
Meanwhile, Angola’s economy has undergone a modest recovery since the height of the coronavirus pandemic, and the economic outlook is positive. Real GDP growth will be anchored by still-high international oil prices in 2024-25 and subsequently by a recovery in hydrocarbons production. Real GDP growth will accelerate to 3.7% in 2028. Disinflation reversed in mid-2023, owing to the removal of petrol subsidies, and we expect inflation to continue to rise in 2024-25 as diesel and other fuel subsidies are removed.
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The president, João Lourenço, will continue to pursue his policy agenda in his second term, which ends in 2027, albeit with a hung parliament. Public protests are likely to persist, driven by a high cost of living emanating from subsidy removal and limited economic and employment opportunities. Inflation dropped from 21.7% in 2022 to 13.6% in 2023, with food prices accounting for 68.8% of the national consumer price index. The National Bank of Angola raised the basic interest rate to 18% in November 2023 and 19% in March 2024 and increased the reserve requirement ratio in national currency. The decline in imports compensated for the 28% drop in exports in 2023, leaving international reserves basically unchanged at the end of 2023 ($14.7 billion) from the end of 2022 ($14.6 billion), equivalent to 7.5 months of import cover.
Angola was ranked 148 of 191 countries on the Human Development Index in 2021, and the official monetary poverty rate was 40.6% in 2019. Most jobs in Angola are informal (79.9%), and the unemployment rate is high (29.6%), driven by rural areas (38%) and youth (52.9%). Additionally, growth is expected to rebound since 2024, driven by non-oil sectors. While new oil projects could increase oil production in coming years, it would be difficult for the sector to avoid long-term decline due to oil depletion and lack of investment. Inflation is projected to decline starting mid-2024. Monetary policy tightening, a conservative fiscal stance, and enough international reserves to reduce pressures on the exchange rate are expected to contain the inflationary pressures.
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