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Poll - Angola economy to grow in 2013 on oil output rebound
by Shrikesh Laxmidas and Vuyani Ndaba

Reuters    Translate This Article
6 November 2012

LISBON/JOHANNESBURG, Nov 6 (Reuters) - Angola's economy is expected to grow strongly next year, boosted by a continued rebound in oil production, a Reuters poll showed on Tuesday.

The median forecast of 13 economists polled last week showed gross domestic product (GDP) in Africa's second largest oil producer after Nigeria would grow 7 percent in 2013.

Angola posted average GDP growth of 15 percent per year between 2002 and 2008, but a drop in oil prices braked expansion to 2.4 percent in 2009 and 3.4 percent in 2010.

The poll showed inflation averaging 10.3 pct this year.

Angola's central bank has made reining in inflation its main goal and its efforts have so far paid off, with the year-on-year rate falling to single digits for the first time in August and slowing further to 9.65 percent in September.

Central bank chief Jose de Lima Massano has said he is confident about reaching a goal of ending the year with 10 percent inflation, but has warned that there is usually upward pressure on prices in the final quarter.

Hopes for a return to fast growth in 2011 were undermined by technical problems and maintenance at oil fields, leading to another expansion of 3.4 percent, far below initial forecasts.

The median forecast for growth this year was 8.0 percent.

A Reuters monthly survey of analysts forecast North Sea Brent crude oil to average $108.80 per barrel in 2013, on the back of supply risks and loose monetary policy that is likely to support oil prices over the next year.

'Our view is that strong growth this year will be based on the ramp up in oil production, partly due to the technical problems of last year being solved,' said Celeste Fauconnier, Africa analyst at Rand Merchant Bank.

The government seeks to increase oil output to 2 million barrels per day (mbpd) in 2014 from an estimated average of 1.75 mbpd this year and 2011's disappointing 1.64 mbpd.

Fauconnier said strong crude prices and more investment in the oil sector next year will drive continued growth, with recent fields boosting output and new ones coming on line.

Fauconnier added, however, that Angola's government must ensure its investment in infrastructure, especially in the oil business, becomes more efficient and also helps diversify the economy to protect it from oil price shocks.

Oil revenues represent over 95 percent of Angola's export earnings and around 45 percent of the GDP.

The forecasts for this year's growth fell from a median 9.1 percent in a poll in June, which analysts at BPI attributed to delays in the start of LNG exports from a new $10 billion plant and to a drought that has affected agricultural production.

INFLATION NEAR FLOOR

Analysts said that the government's goal of cutting inflation further to 8 percent next year will be difficult to reach given Angola's poor logistics, which make the distribution of goods across the country a challenge.

Around 80 percent of the goods Angolans consume are imported.

'If inflation hasn't reached a bottom level yet, it is very close and we expect it will in the next couple of months,' said Shilan Shah, Africa economist at Capital Economics in London.

'It has fallen significantly, but looks stable now. When there are massive supply-side constraints like those in Angola, inflation cannot fall much lower,' he added.

The median forecast for average price increases in 2013 was 9.5 percent, with the lowest estimate at 8.6 percent.

(Reporting by Shrikesh Laxmidas in Lisbon and Vuyani Ndaba in Johannesburg; Editing by Keiron Henderson)

© Copyright 2012 Reuters

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