GDP growth sped up to 2.6% year on year in the first quarter, from 2.2% in the fourth quarter of last year. Q1’s reading marked the strongest growth since Q4 2018.
The stronger annual growth reading came principally on the back of a recovery in the key oil sector, wherein production expanded 21.0% in the three months ending in March. This notably contrasts the fourth quarter’s 2.8% annual contraction. Prices for the black gold were buoyed by healthier global demand at the outset of the year, and received a further stimulus from the outbreak of the war in Ukraine in the tail-end of the quarter. The non-oil sector’s performance, meanwhile, moderated (Q1 2022: +3.2% year on year; Q4 2021: +4.0% yoy). Contractions in the agricultural, fishing, mining and quarrying, and commerce sectors more than offset stellar growth in the construction, financial services and communications sectors.
On a seasonally-adjusted quarter-on-quarter basis, economic growth accelerated to 4.3% in Q1, from the previous period’s 1.6% increase. Q1’s reading marked the strongest expansion since Q4 2014 and highlights that underlying conditions improved notably in the period.
The economy is expected to continue expanding at a healthy rate this year as lesser Covid-19 restrictions spur domestic demand. Furthermore, spiking prices in an already bullish energy market due to the fallout from the war in Ukraine should further support economic growth. Greater oil prices and demand also bode well for the Angolan kwanza, which should exert some downward pressure on inflation and provide another boost to the domestic economy. Instability in the region and uncertainty surrounding August’s election, and protests leading up to it, further cloud the outlook.
Analysts at the EIU commented on another risk to the outlook:
“The major downside to our 2022 growth outlook is the worsening of China’s coronavirus situation under its controversial zero-covid policy (not our baseline forecast). China is Angola’s major export destination, absorbing about 67% of Angola’s exports in 2021.”
FocusEconomics panelists see GDP expanding 3.2% in 2022, which is unchanged from last month’s forecast. In 2023, the economy is seen growing 3.1%.