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Angolan Government Admits Economy Stagnated in Q1, Rules Out Recession

Angolan Government Admits Economy Stagnated in Q1, Rules Out Recession

Angola’s ministry for the economy and planning ruled out on Thursday any economic recession as a result of the stagnation of the country’s economy in the first quarter of 2023 due to the oil slump, considering that “structural programmes” should reverse the course.

The head of the department for Macroeconomic Policy and Management of the ministry, Martins Afonso, today presented the evolution of Gross Domestic Product (GDP) in the first quarter of 2023 and noted that quarterly decline is not symptomatic of recession.

“This growth of minus 1.1% is compared with the previous quarter, but the year-on-year variation represents a growth of 0.3%, now when we compare it to the fourth quarter of 2022, there we will register a decline of 2.3 percentage points,” he told Lusa during a press briefing.

According to Martins Afonso, the GDP register for the first three months of 2023 does not translate into a recession. “But the economy stagnated because of an abrupt drop that occurred in the oil sector”.

“And what happened in this sector is that the amount of production here fell significantly, and that was reflected in the fall in exports, and that fall had a strong influence on the capacity of the entry of resources, that is, which are the foreign exchange,” he maintained.

Angola’s GDP was 0.3% year-on-year in the first three months of 2023 and fell 1.1% from the previous quarter, according to the Angolan National Statistics Institute (INE).

According to the Quick Information Sheet, to which Lusa had access, this is the first time that quarterly GDP has slipped into negative territory since the second quarter of 2021.

The decline in oil exploration and refining activity (1.11 percentage points) was at the root of the negative quarterly variation and anaemic growth in the first quarter of 2023.

In year-on-year terms, the Gross Value Added (GVA) of oil fell by 8.0% in the first quarter of 2023 from the same quarter of the previous year, contributing 2 percentage points negatively to the total change in GDP.

Asked about actions to counteract the stagnation of the Angolan economy in that period, Martins Afonso pointed to structural programmes such as the grain production plan and fishing and livestock production plans as “solutions.

According to Afonso, these plans “will drive the process of economic diversification and contribute to the growth of the non-oil sector,” and the challenge that can now be seen “is a gradual decrease of the oil sector in the weight of GDP.

He also noted, in his speech, GDP growth of 0.3% in the last quarter, noting that this was “mainly sustained by the non-oil sector that grew by 2.8% despite an 8% contraction of oil GDP.

“The non-oil GDP performance of 2.8% was mainly sustained by the transport sector, which grew 27%, and the extraction sector, with 22.9%, energy and water, 7.80% and others,” he noted.

The oil sector continues to have the biggest share of Angola’s total revenues.

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