The Angolan Economy - Many More Hills to Climb

Stable macroeconomic environment
Angola has been one of the fast-growing economies in the world in the last decade, with GDP expanding at an annual 11% and per capita income rising more than eight-fold during this period. Today, GDP per capita stands above US$ 5,000, considered a middle-income level. Like its oil-exporting peers, Angola has benefited from high commodity prices in recent years. The country currently has a positive fiscal balance and low public debt. On top of this, it has a more comfortable level of international reserves (covering nearly eight months of imports) as well as a stable exchange rate, which helped lower inflation to single-digits for the first time in over two decades.  

Long-term national development strategy "Angola 2025"
Following the strong efforts to rebuild a country devastated by decades of war, the Angolan authorities are now focused on implementing a development strategy that will ensure stability, growth and employment in the long-run. "Angola 2025" is also targeted at reducing the poverty levels and improving the literacy and skill levels of the local population. The National Development Plan 2013-17 is part of the "Angola 2025" vision and aims to promote economic diversification. Authorities hope that it will help double the number of investment projects approved every year by ANIP, the national private investment agency, and create many jobs. Moreover, officials are committed to the recovery of national production, including the revitalization of the agricultural sector in order to reduce the country's reliance on imported goods.

Angola Sovereign Wealth Fund starts with US$5 billion
Angolan officials hope that the new mining code introduced in December 2011 will encourage investment in the exploitation of untapped mineral reserves and help the country become an important player in the mining industry. Production at a LNG plant began this year, with the first export shipment taking place in June followed by the shipment of another four cargoes since then should help boost economic growth in the short-term. A sovereign wealth fund has also been announced in order to create buffers against future commodity price shocks. It will reportedly amount to US$5 billion and will have an even balance between liquid and long-term assets.

Tremendous challenges ahead
Economic activity in Angola should expand at 5-7% in 2013-14 while inflation is likely to remain at single-digits, as the current level of foreign exchange reserves should guarantee the Central Bank enough firepower to avoid inflationary risks. That said, the country faces tremendous challenges ahead, namely in terms of improving its infrastructures, human capital, business climate and the social conditions of its population. One can say that Angola has climbed a steep hill in the last decade, but one also finds that now this great country and its people have many more hills to climb in the future.