Low oil prices batter Angolan economy

Low oil prices are severely impacting oil-producing countries like Angola who now more than ever appreciate the need to diversify. But despite efforts at diversification (mining, agriculture, construction) the Angolan economy and financing sources (foreign currency earnings, banking system) still rely heavily on the oil sector.

The 6% devaluation of the kwanza by Angola’s central bank (BNA) in June has not alleviated pressure on the national currency which reached an all-time low in mid-July, losing 18% since January 1. Economic growth is being hurt by liquidity and currency pressures, rising inflation and fiscal constraints, according to information released by credit insurer Coface.

The high dependency of the country on hydrocarbons is increasing its vulnerability, with oil accounting for nearly 40% of GDP, more than 70% of fiscal revenues and above 90% of goods export earnings, according to Coface.