Angola’s immediate economic outlook is challenging. The fortunes of Africa’s largest oil producer have collapsed as subdued commodity prices have exacted a brutal toll on its fiscal and current account balances. The International Monetary Fund (IMF) expects gross domestic product (GDP) growth of about 2.5% in 2016 – though research from BNP Paribas suggests that the country is on the brink of a recession, with GDP forecasted to contract by -1% this year.
The 2016 state budget, passed by the Angolan parliament in December 2015, was altered in March as the government slashed spending by 20% and revised its average oil price assumption for the year down from $45 per barrel to $38 per barrel. Even with this intervention, the authorities are expecting a budget deficit of 5.5% of GDP, a marginal improvement on the 7.5% recorded in 2015. “Given where the price of oil is, I don’t see Angola’s situation improving in the next 12 to 18 months,” says Sanjay Bhasin, chief executive of Banco Económico.
