Angola economy to rebound in 2010
12/03/2010
Angola, once one of the world's fastest-growing economies, is expected to expand between 6.5 and 7.5 percent in 2010 due to higher oil prices from around zero last year, the World Bank said.
Senior World Bank economist Ricardo Gazel said higher oil prices should help the oil-producing nation recover some of its foreign exchange reserves, which dropped by a third in 2009.
"Angola's economy is expected to perform much better in 2010 compared to 2009. Preliminary data suggests that oil revenues have improved especially compared to same period in 2009," Gazel said in his monthly World Bank report.
Oil prices more than doubled in the last year to around $80 per barrel. Oil accounts for over half of Angola's GDP, 80 percent of government revenues and 90 percent of export revenues.
After emerging from a civil war in 2002 to rival Nigeria as Africa's biggest oil producer, Angola plans to pump 1.9 million barrels per day in 2010, up from 1.82 million in 2009, according to its 2010 budget.
New loans from the IMF and China should also help bolster the economic recovery, Gazel said, after a slump in oil prices in 2008 and 2009 ended several years of double-digit expansion.
The government predicts the economy will expand 8.6 percent this year, up from 1.3 percent in 2009.
The African nation signed three new credit lines with China at the end of 2009 worth $10 billion, according to the World Bank report. Gazel said Chinese loans to Angola since the end of the civil war in 2002 were now at around $14.5 billion.
"But there may be other loans that haven't been disclosed," he said.
Most of these loans are being repaid in oil. Angola has overtaken Saudi Arabia and Iran to become China's biggest supplier.
Gazel added that strong economic growth and the devaluation of the kwanza currency <AOA=>, down 19.5 percent last year, should continue to fuel inflation.
"Price pressures are likely to remain strong in 2010 due to stronger economic growth and the lag effect of the kwanza devaluation," he said.
"However, if tight fiscal and monetary policies remain in place, they could help in keeping prices under control."
Inflation slowed to 13.66 percent year-on-year in February from 13.83 percent in January, according to the National Statistics Institute. The government has targeted average annual inflation of 13 percent in 2010.
