Analysts at the Economist Intelligence Unit (EIU) expect 2024-2025 to be a period of relative stability of the Kwanza against the US dollar, due to the “cushion” of foreign exchange reserves.
The EIU report, to which Lusa had access, points to a stabilization of the Kwanza, after an estimated devaluation of 34 percent in mid-2023, with the risk of volatility remaining in 2024-2028, given the decrease in Kwanza prices. oil, partially offset by increased production. “We hope that 2024-2025 will be a period of relative stability of the Kwanza against the US dollar (after an estimated devaluation of 34 percent in 2023), due to the “cushion” of foreign exchange reserves”, the report reads. The tightening of the Federal Reserve’s (US central bank) monetary policy from mid-2024 means that the strength of the US dollar will tend to decrease, preventing the devaluation of the Kwanza, the EIU also states, noting, however, that the refund of external debt in 2024 will increase pressure on foreign exchange reserves, increasing the risk of exchange rate volatility in the short term.
Angola’s economic prospects are overall positive, supported by the oil sector and recovery of the non-oil sector (mainly gas and mining, together with services and construction) in the medium term. Real GDP growth, the document estimates, will average 3.5 percent, reaching 4 percent in 2028. The Economist group’s analysis unit states that Angola will prioritize debt repayment and social spending in 2024, cutting other expenses. Positive indicators The EIU states that the rise in global oil prices (to a forecast average of $84.8/barrel, above the government average of $65/barrel) will cause the revenue/GDP ratio to increase, “providing a modest fiscal surplus of 0.5 percent of GDP in 2024, compared to an estimated deficit of 0.7 percent in 2023”. As for inflation, it should maintain its upward trend in 2024, due to the increase in global oil and raw material prices, with average inflation expected to be 18.7 percent in 2024 and 21.2 percent in 2025 . above the estimate of 13.1 percent in 2023. In 2026-28, the EIU expects an improvement in domestic fuel supplies from new refineries, limiting the impact of the devaluation of the Kwanza on inflation, even with the liberalization of fuel prices. “The fall in food prices, the decline in the impact of fuels and the removal of subsidies will help contain inflation to an average of 14.3 percent per year during this period”, highlights the document.