Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Second largest oil producer in Africa, Angola also has the fifth largest GDP in sub-Saharan Africa. After a long civil war, the country posted one of the highest economic growth rates in the world, driven by its oil wealth. Angola was then severely affected by the fall in oil prices and by the fall in world demand (notably from China). In 2021, it entered its seventh year of recession (-0.7% GDP), hit by the COVID-19 pandemic, the collapse of oil prices and restrictions under the OPEC+ production agreement, but the non-oil sector started to recover. According to IMF estimates, the economy should pick up to 2.4% in 2022 and 3.3% in 2023, supported by the implementation of planned growth-enhancing structural reforms and a rebounding oil sector. A resurgence of Covid-19 infections, social unrest and weakened public finances are potential downside risks.

Already impacted by decreasing oil revenues since 2015, the Angolan economy was further hit by the Covid-19 pandemic that broke out in 2020. In 2021, higher oil prices, loosened restrictions, policy discipline and commitment to reforms helped the economy to start recovering. In addition to the stimulus plan designed to tackle the social impacts of the crisis, the authorities pursued the three-year reform program supported by the IMF. It aimed to restore external and fiscal sustainability, improve governance, and diversify the economy to promote sustainable, private sector-led economic growth (IMF). Fiscal discipline lead to a substantial budget surplus of 2.6% GDP in 2021, a trend that is projected to continue in 2022 (2.1% GDP) and 2023 (2.5% GDP) (IMF). Despite being still very high, public debt dropped from an estimated 136.5% GDP in 2020 to 103.7% GDP in 2021 (IMF). It is forecast to further decline to 90.8% GDP in 2022 and 83.3% GDP in 2023 (IMF). Driven by supply-side factors, inflation soared to an estimated 24.4% in 2021, and should gradually decline to 14.9% in 2022 and 9.9% in 2023, as global food inflation moderates and the central bank maintains a tight policy stance (IMF). The IMF-supported program came to an end in 2021, but the Angolan authorities remain committed to their plan of economic reforms, as reflected in the prudent fiscal stance adopted in the 2022 budget. Among the many challenges faced by the country, strengthening debt sustainability, addressing the financial sector’s weaknesses, diversifying the economy, improving governance and developing human capital and infrastructure should be key priorities (IMF).

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 getting the country out of the crisis, but the social situation of Angola remains tensed. Inequalities, economic sluggishness and inflation are nourishing people's dissatisfaction. Only a third of the population has access to electricity. The income per capita has been gradually increasing, especially in the metropolitan regions, but poverty and unemployment rates remain high. According to the African Development Bank, the pandemic is expected to exacerbate the 2019 official poverty incidence of 40.6%. Poverty is more dominant in rural areas (58%) than in urban areas (19%). The unemployment rate rose to 34% in the third quarter of 2020, with youth unemployment rising to a high of 56.4% (AFDB). According to the World Bank data (modelled ILO estimate) unemployment rate was at 7.7% of labour force in 2020. Violence in the region of Kasaï (Democratic Republic of Congo) provoked the arrival of more than 30,000 refugees in Angola.

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