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Angola’s Minister of Economy and Planning, Mário Caetano João, has indicated that the southern African country is forecasting economic growth of 3% in 2023, with an increase to an average of over 3.6% between 2023 and 2027 

Announced on 26 April, the Minister highlighted that economic growth in Angola will be driven primarily by the country’s oil sector.

Oil sector growth during the forecast period is expected to average 1%, while non-oil growth is poised to average 4.6%, Caetano João indicated. Decreased oil production in the country and reduced fiscal impulse, however, is set to moderate the country’s economic growth in 2023, thus falling below the country’s projected population growth of 3.1%.

Despite this downturn, recent discoveries in the country are set to attract more investment into Angola’s oil sector, with exploration efforts by oil and gas supermajor, ExxonMobil in 2022 having resulted in in the discovery of 30m of high-quality, hydrocarbon-bearing sandstone. Meanwhile, in 2022, energy major TotalEnergies announced its intention to invest US$3bn in Angola for projects related to oil exploration.With the country’s economy intrinsically linked to global oil demand, higher oil prices in 2022 allowed Angola’s currency to appreciate by 26.2% while fiscal expansion has served to strengthen domestic demand and generate growth in private consumption, which is estimated at approximately 5%.

Economic reforms in Angola over the past five years have allowed the country to improve macroeconomic management and public sector governance, with stability having been attributed to a more flexible exchange rate regime, central bank autonomy, favorable monetary policies, and fiscal consolidation. As such, the promotion of greater private sector participation in Angola’s economy is poised to increase the stability of the financial sector while reducing the impact of volatility within the oil sector.

However, it has been noted by international financial institution, the World Bank, that in order for Angola to transform its economy towards a more sustainable, inclusive, and private sector-led model, the country will require strong political commitment to transform and diversify its state-led, oil-funded economy to improve macroeconomic management and public sector governance. Upcoming natural gas and renewable energy projects, however, offer diversification opportunities, enabling the Angolan economy to grow on the back of sustainable energy.

Angola’s economic outlook, oil demand and supply trends, and ongoing diversification efforts will be further unpacked during this year’s edition of the country’s premier energy event: Angola Oil & Gas (AOG), taking place in Luanda this year.