Population: 19,625-million 2)
GDP: US$99,325-billion
Country rating: C
Business climate rating: D 
Strengths
· Large and growing oil production due to offshore development
· Diversified economic potential (diamonds, iron, copper, gold, hydroelectricity, agriculture and fishing)
· Strong regional influence
· International backing
Weaknesses
· Vulnerability to oil price downturns
· Instability of the Cabinda enclave, source of one third of the oil
· Largely poor and unskilled population
· Regional inequality exacerbated by dilapidated infrastructure
· Difficult business environment
Risk assessment
Economic growth in phase with the flow of oil revenues
Oil production is the backbone of Angola’s economy. Angola’s high level of oil production rivals that of Nigeria for the title of the largest oil producer in Africa. This sector makes up over 90% of the country’s exports. In 2010 the significant rise in oil prices contributed to strong GDP growth, with a further but slight acceleration in 2011.
Public-sector investment will remain constrained by the need to settle arrears with local construction companies. A more clear-cut acceleration of growth is unlikely to come until 2012 with the start of exploitation of new deep-water fields and of exports of liquefied natural gas.
Sensitivity to imported inflation
Inflation will likely exceed 10% in 2011 in the context of the relative weakness of the Angolan kwanza and increases in world agricultural prices. With imports constituting 90% of the merchandise marketed in the country, effective management of the kwanza exchange-rate is particularly crucial.
The outlook for 2011 and 2012 is promising. The growth rate forecast for 2011 is 7,1% which can only be sustained by higher oil prices and the resumption of government’s Public Investment Programme.
Public sector accounts dependent on oil revenues and subject to tax evasion
In 2009, the fiscal budget went into deficit with the decline in oil revenues. Excluding oil, the deficit exceeded 30%, which attests to the proportion (80%) of oil revenues in the budget.
In 2010, the budget balance was only marginally in surplus with the upturn in oil prices was offset by the need to settle arrears with the non-oil private sector and by better execution of budgeted expenses. Little change is expected in the fiscal surplus in 2011. Fiscal revenues will remain limited by the narrow tax base attributable notably to the flight of capital and low collections.
External account balance dependent on oil and foreign investment
After showing a deficit in 2009 due to a decline in oil deliveries and prices, the current account showed a slight surplus in 2010 due to a turnaround in the oil market. But the surplus will likely decline in 2011 with oil exports lower than the growth in merchandise imports, particularly capital goods associated with oil exploration or infrastructure remediation. The increase in the repatriation of dividends and the billing of services by foreign oil companies will be a contributing factor.
Despite its traditional current account surplus (except in 2009), Angola has financing needs resulting from the amortisation of its debt and the flight of capital. These needs are covered by foreign direct investment (13% of GDP) focused mainly on oil but also on the country’s transport and energy infrastructures. Although foreign exchange reserves will grow, they will still represent only three or four months of imports. The new stabilisation funds created at the insistence of the IMF from the revenues from oil and diamonds, do not guarantee any improvement in foreign exchange reserves.
A difficult business environment
The legislative elections in September 2008 confirmed the supremacy of the MPLA, the party of President Dos Santos, who emerged in 2002 as the winner of the civil war. Early 2010, president Dos Santos promulgated a new constitution that only provides for the indirect election of the president by the Members of Parliament and replaces the function of prime minister by a vice president selected by the president among those same MPs.
The main opposition party UNITA, has been critical of those constitutional clauses, which it considers to be intended to perpetuate the hegemony of president Dos Santos and the MPLA. Though the opposition appears marginalised and co-opted, the tension has been growing among those in power with some elements opposed to the anticorruption campaign required by the IMF.