Angola: Economic and Political Overview
In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline | COVID-19 Country Response
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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.
| Main Indicators | 2020 | 2021 (e) | 2022 (e) | 2023 (e) | 2024 (e) |
|---|---|---|---|---|---|
| GDP (billions USD) | 58.13 | 75.18 | 124.79 | 135.56 | 142.20 |
| GDP (Constant Prices, Annual % Change) | -5.8 | 0.8 | 2.9 | 3.4 | 3.9 |
| GDP per Capita (USD) | 1e | 2 | 3 | 3 | 4 |
| General Government Balance (in % of GDP) | 0.5 | 2.4 | 0.8 | -0.9 | -0.7 |
| General Government Gross Debt (in % of GDP) | 136.5 | 86.4 | 56.6 | 52.5 | 47.9 |
| Inflation Rate (%) | 22.3 | 25.8 | 21.7 | 11.8 | 9.9 |
| Current Account (billions USD) | 0.87 | 8.40 | 14.13 | 7.35 | 3.68 |
| Current Account (in % of GDP) | 1.5 | 11.2 | 11.3 | 5.4 | 2.6 |
Source: IMF – World Economic Outlook Database , Latest available data
Note: (e) Estimated Data
Angola is Africa's second largest oil producer, a net producer of natural gas and also the third largest producer of diamonds in the continent, surpassed only by Botswana and the Democratic Republic of Congo. The Angolan economy - the fifth largest in sub-Saharan Africa - is dominated by the oil and gas industry, which accounts for about 50% of its GDP and is the primary source of revenue for the country (more than 70% of government revenue and 90% of Angola's exports come from oil activities). In addition to diamonds, the country also produces gold, granite, gypsum, marble, and salt, and possesses 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. The industrial sector represents 45.9% of GDP and 7% of employment.
Despite its potential, the agricultural sector is underdeveloped and not very productive, contributing to 9.5% of GDP but employs 51% of the population. Only about a third of Angola's arable land is used for harvests; of those, only 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. The key industrial crops are coffee and cotton. The Government heavily invested in coffee, sugarcane and ethanol productions, which should help to diversify agricultural revenues and exports.
The services sector (banking, communication, tourism) is also growing rapidly, accounting for 39.6% of GDP and employing 42% of the population. Tourism is growing, although there is a severe shortage of hotels and other types of accommodation. The construction sector is booming (9% of GDP), driven by a large reconstruction program launched by the government.
The supply and demand shocks induced by the COVID-19 crisis particularly affected the oil sector, mining production and transportation and services, which were hit hard by the lockdowns. In 2021, manufacturing, trade and construction sectors drove the recovery while the oil sector remained downbeat (Focus Economics).
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 50.7 | 6.8 | 42.5 |
| Value Added (in % of GDP) | 9.4 | 44.8 | 41.4 |
| Value Added (Annual % Change) | 6.9 | -8.4 | -1.3 |
Source: World Bank - Latest available data.
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| Monetary Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| Angolan New Kwanza (AON) - Average Annual Exchange Rate For 1 MUR | 4.60 | 4.81 | 7.45 | 10.28 | 14.70 |
Source: World Bank - Latest available data.
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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.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
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.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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Angola has considerably liberalised its trade scheme over the last few years. Trade represents around 67% of the country's GDP (World Bank, latest available data). The country is a member of SADC (Southern African Development Community) and ECCAS (Economic Community of Central African States), and signed the African Continental Free Trade Agreement in May 2019. Custom duties are relatively low (9.5% in average). The imports of certain products, such as pharmaceuticals and agricultural products, still require authorisations from the concerned official ministries. Angola has also adopted the SADC guidelines on biotechnology, which ban the import of biotechnological particles. Delays in customs clearance at the ports still remain a major problem.
Oil exports account for more than 95% of total exports. The country is also a major exporter of diamonds and is exporting liquefied natural gas to the American, European and Japanese markets; other exports include, coffee, sisal, and fish. Imports mainly involve machinery, vehicles, spare parts, medicines, food, textiles, and military goods. Angola's main trade partners are China (more than 60% of exports), India, the European Union (Spain, Portugal) and the United States. In 2020 and 2021, Angola's oil revenues were impacted by the collapse of oil prices and restrictions under the OPEC+ production agreement.
Thanks to its comfortable oil revenues, Angola historically records a large but volatile trade surplus that should continue in the coming years. In 2020, merchandise exports decreased to USD 20.9 billion (from USD 34.7 billion in 2019), while imports dropped to USD 9.5 billion (from USD 14.1 billion). Services exports fell to USD 66 million (from USD 455 million in 2019), while imports dropped to USD 5.4 billion (from USD 8 billion) (WTO). In 2020, the trade balance declined to USD 11.4 billion, down from its 2019 level (USD 20.6 billion) (World Bank). Due to the fall in oil exports and the persistent impacts of the COVID-19 pandemic, the trade surplus narrowed further in 2021.
| Foreign Trade Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| Imports of Goods (million USD) | 19,246 | 14,463 | 15,798 | 14,127 | 9,543 |
| Exports of Goods (million USD) | 25,164 | 34,613 | 40,758 | 34,726 | 20,937 |
| Imports of Services (million USD) | 12,546 | 12,903 | 9,772 | 8,008 | 5,415 |
| Exports of Services (million USD) | 1,156 | 985 | 631 | 455 | 66 |
| Imports of Goods and Services (Annual % Change) | -24.7 | 1.5 | -16.9 | -0.0 | -23.3 |
| Exports of Goods and Services (Annual % Change) | -18.4 | -4.2 | 1.2 | 0.8 | -6.8 |
| Imports of Goods and Services (in % of GDP) | 25.2 | 23.3 | 25.5 | 24.9 | 27.3 |
| Exports of Goods and Services (in % of GDP) | 28.1 | 29.0 | 40.8 | 39.3 | 35.3 |
| Trade Balance (million USD) | 14,548 | 20,150 | 24,960 | 20,599 | 11,394 |
| Trade Balance (Including Service) (million USD) | 2,643 | 7,341 | 15,502 | 12,881 | 5,881 |
| Foreign Trade (in % of GDP) | 53.4 | 52.3 | 66.4 | 64.3 | 62.6 |
Source: WTO – World Trade Organisation ; World Bank , Latest Available Data
| Main Customers (% of Exports) |
2019 |
|---|---|
| China | 61.3% |
| India | 9.9% |
| Spain | 3.4% |
| United Arab Emirates | 3.2% |
| Portugal | 3.2% |
| See More Countries | 18.9% |
| Main Suppliers (% of Imports) |
2019 |
|---|---|
| China | 14.3% |
| France | 14.1% |
| Portugal | 12.9% |
| Belgium | 6.3% |
| South Korea | 5.3% |
| See More Countries | 47.1% |
Source: Comtrade, Latest Available Data
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| 0.6 bn USD of services exported in 2018 | |
|---|---|
| 86.22% | |
| Business travelBusiness travel | 71.67% |
| Personal travelPersonal travel | 14.55% |
| 4.90% | |
| 4.42% | |
| 3.15% | |
| 1.30% | |
| 10.0 bn USD of services imported in 2018 | |
|---|---|
| 33.22% | |
| 26.80% | |
| 18.91% | |
| 5.55% | |
| Personal travelPersonal travel | 4.97% |
| Business travelBusiness travel | 0.58% |
| 3.95% | |
| 3.83% | |
| 3.18% | |
| 2.47% | |
| 1.05% | |
| 1.04% | |
Source: United Nations Statistics Division, Latest Available Data
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the World Bank's Map of SME-Support Measures in Response to COVID-19.
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Latest Update: November 2022
