Figure 1: Merchandise Trade Balance in Angola (2015-2018)
Source: UNCTAD 2019, UNCTADStat Database.
Total merchandise imports to Angola moderated to USD 15.4 billion in 2018, from an annual average of USD 16.1 billion from 2015 to 2017[1]. Exports increased significant to USD 42.0 billion in 2018 from an annual average of USD 31.7 billion from 2015 to 2017[2]. The stronger growth in exports has assisted to improve Angola’s growing merchandise trade surplus to USD 26.5 billion in 2018 from an average of USD 15.6 billion from 2015 to 2017[3]. The strong increase in export earnings has also reduced the deterioration of gross official reserves in spite of the significant depreciation of the AOA.
Figure 2: Gross Official Reserves in Angola (2016-2022)
Source: IMF 2019a, Angola First Review of the Extended Arrangement Under the Extended Fund Facility; IMF 2018, Angola Request for An Extended Arrangement Under the Extended Fund Facility. Note: (*) Figures from 2019 onwards are projections from the IMF, 2019.
Gross official foreign exchange reserves decreased to USD 16.2 billion in 2018 from an annual average of USD 22.3 billion from 2015 to 2017[4]. During this period, the AOA depreciated by -34.4% in 2018 to AOA 253.0 per USD (2017: -1.2%)[5]. The depreciation in currency was largely due to sustained pressure on the previously pegged exchange rate between the AOA and the USD, which forced Angolan authorities to start implementing a managed floating exchange rate regime from January 2018[6]. The AOA depreciated by an annual average of -22.6% in 2015 and 2016 from AOA 98.0 per USD in 2014 to AOA 164.0 per USD in 2016[7]. Gross official reserves are projected to decrease to USD 15.2 billion in 2019, which is equivalent to 6.6 months’ import cover[8]. In the forward-looking medium-term from 2020 to 2022, gross official reserves are projected to increase to an annual average of USD 17.7 billion (approx. 7.4 months’ import cover)[9]. The export growth and exchange control reforms by the National Bank of Angola (BNA) authorities has also supported a rebalancing of Angola’s current account balance.
Angola’s current account balance improved to a surplus of USD 6.8 billion in 2018, from a deficit averaging -USD 5.1 billion from 2015 to 2017[10]. In addition to the growth in exports, which improved the current account balance, demand for services imports declined as the immediate response to the depreciation of the AOA. Services imports decreased to USD 10.7 billion in 2018 (2017: USD 13.8 billion)[11]. The current account balance is projected to deteriorate to a deficit of -USD 1.7 billion (approx. -2.0% of GDP) in 2019[12]. In the forward-looking medium-term from 2020 to 2022, the current account balance is projected to rebalance to a surplus averaging USD 100.0 million (approx. 0.2% of GDP)[13].
Figure 3: Current Account Balance in Angola (2016-2022)
Sources: IMF 2019a, Angola First Review of the Extended Arrangement Under the Extended Fund Facility; IMF 2018, Angola Request for An Extended Arrangement Under the Extended Fund Facility. Note: (*) Figures from 2019 onwards are projections from the IMF, 2019.
However, Angola is still heavily dependent on crude oil exports which have been affected by commodity price volatility and the general decline in commodity prices since 2014. For example, Brent crude oil prices declined by an annual average of -24.0% from USD 98.9 per barrel in 2014 to USD 44.0 per barrel in 2016, before recovering to USD 54.4 per barrel in 2017[14]. Crude oil contributed 95.6% of Angola’s total export earnings in 2018 which has remained largely unchanged from the average of 95.4% from 2015 to 2017 (2014: 96.2% of exports)[15]. In addition to this concentration of exports, Angola is also poorly integrated in terms of regional trade with neighbouring countries in SADC.
The top export from Angola to SADC is also crude oil, which constituted 3.8% of total exports in 2018 (2015-‘17: 3.9% of total exports)[16]. The value of crude oil exports from Angola to SADC increased to USD 1.5 billion in 2018 from an annual average of USD 1.2 billion from 2015 to 2017[17]. The only other two exports from Angola to SADC are fish and wood, which are negligible in comparison to the oil exports. The value of fish exports from Angola to SADC increased to USD 2.4 million in 2018 from an average of USD 2.1 billion from 2015 to 2017[18]. The value of wood exports increased to USD 139,572.0 in 2018 from an annual average of USD 103,149.3 from 2015 to 2017[19].
The value of total exports from Angola to SADC increased to USD 1.6 billion (approx. 3.8% of total exports) in 2018 from an average of USD 1.2 billion (approx. 3.1% of total exports) from 2015 to 2017[20]. These are very poor levels of intra-regional trade given that the SADC average intra-regional exports level was 17.9% of total exports in 2018. The SADC intra-regional exports, meaning total exports amongst SADC countries, as a share of total exports to the world decreased from an average of 20.8% from 2015 to 2017[21]. Hence, there is significant room for Angola to increase and diversify its exports to SADC countries.
Figure 4: Nominal Exchange Rate in Angola (2015-2018)
Sources: IMF 2018, Angola Request for An Extended Arrangement Under the Extended Fund Facility. Note: (*) Figures from 2018 onwards are projections from the IMF, 2018.
Angola’s top-five imports from SADC are alcoholic beverages, cereal meal and flour, construction equipment, vegetables and commercial vehicles. Although these imports are diversified they only constituted 1.2% of total imports to Angola in 2018 (2015-‘17: 1.2% of total imports)[22]. The value of the top-five imports from SADC to Angola increased to USD 191.6 million in 2018 from an annual average of USD 181.6 million from 2015 to 2017[23]. Angola’s imports from SADC are diversified and the country has a significant merchandise trade surplus in the region.
The value of Angola’s total imports from SADC increased to USD 977.7 million (approx. 3.8% of total imports) in 2018 from an annual average of USD 956.4 million (approx. 3.1% of total exports) from 2015 to 2017[24]. These are very poor levels of intra-regional trade given that the SADC average intra-regional imports level was 20.9% of total imports in 2018[25]. The SADC intra-regional imports, meaning total imports amongst SADC countries, as a share of total imports from the world increased only from an average of 20.7% from 2015 to 2017[26].
Table 1: SADC Regional Trade for Angola (2015-2018)
Source: UNCTAD 2019, UNCTADStat Database.
Hence, there is significant room for Angola to increase its imports from SADC countries given the trade surplus that the country enjoys. In addition, there is significant room to diversify Angola’s exports to SADC given the concentration in crude oil. This would also make Angola’s intra-regional trade balance more equitable.
[1] UNCTAD 2019. UNCTADStat Database, United Nations Conference on Trade and Development: Geneva. Available At: https://unctadstat.unctad.org/ [Last Accessed: 26 September 2019].
[2] UNCTAD 2019. UNCTADStat Database, ibid.
[3] UNCTAD 2019. UNCTADStat Database, ibid.
[4] IMF 2019a. Angola First Review of the Extended Arrangement Under the Extended Fund Facility; International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 26 September 2019]; IMF 2018. Angola Request for An Extended Arrangement Under the Extended Fund Facility, International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 26 September 2019].
[5] IMF 2018. Angola Request for An Extended Arrangement Under the Extended Fund Facility, ibid.
[6] BNA 2018. Foreign Exchange Market, National Bank of Angola: Luanda. Available At: http://www.bna.ao/ [Last Accessed: 26 September 2019].
[7] IMF 2018. Angola Request for An Extended Arrangement Under the Extended Fund Facility, ibid.
[8] IMF 2018. Angola Request for An Extended Arrangement Under the Extended Fund Facility, ibid.
[9] IMF 2019a. Angola First Review of the Extended Arrangement Under the Extended Fund Facility; ibid.
[10] IMF 2019a. Angola First Review of the Extended Arrangement Under the Extended Fund Facility; ibid.; IMF 2018. Angola Request for An Extended Arrangement Under the Extended Fund Facility, ibid.
[11] IMF 2019a. Angola First Review of the Extended Arrangement Under the Extended Fund Facility; ibid.; IMF 2018. Angola Request for An Extended Arrangement Under the Extended Fund Facility, ibid.
[12] IMF 2018. Angola Request for An Extended Arrangement Under the Extended Fund Facility, ibid.
[13] IMF 2019a. Angola First Review of the Extended Arrangement Under the Extended Fund Facility; ibid.
[14] IMF 2019b. IMF Primary Commodity Prices, International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 4 October 2019].
[15] UNCTAD 2019. UNCTADStat Database, ibid.
[16] UNCTAD 2019. UNCTADStat Database, ibid.
[17] UNCTAD 2019. UNCTADStat Database, ibid.
[18] UNCTAD 2019. UNCTADStat Database, ibid.
[19] UNCTAD 2019. UNCTADStat Database, ibid.
[20] UNCTAD 2019. UNCTADStat Database, ibid.
[21] UNCTAD 2019. UNCTADStat Database, ibid.
[22] UNCTAD 2019. UNCTADStat Database, ibid.
[23] UNCTAD 2019. UNCTADStat Database, ibid.
[24] UNCTAD 2019. UNCTADStat Database, ibid.
[25] UNCTAD 2019. UNCTADStat Database, ibid.
[26] UNCTAD 2019. UNCTADStat Database, ibid.
