Angola is in the edge of a perfect storm, affecting economic, social and
political structures.
Oil prices have declined, being foreseeable to remain low for longtime, due to shale oil supply and global demand reduce, affecting negatively Angolan revenues and conducting to budgetary deficits, lack of foreign currency and foreign exchange reserves falling abruptly causing devaluation and accelerating inflation grow in the short term. At the same time, fuel subsidies have been cut, reducing families’ disposable income. This dramatic rise in prices will cause a preference for foreign currency, especially US Dollars, causing a shortage in foreign currencies and stepping up exchange rates for those currencies to new heights. New Kwanza’s devaluations will mean more inflation and stress for Angolan consumers, particularly people used to have access to very expensive goods, who risk becoming the “new poor”, losing all their current life style and facing lack of liquidity sooner than they may expect.
Oil prices have declined, being foreseeable to remain low for longtime, due to shale oil supply and global demand reduce, affecting negatively Angolan revenues and conducting to budgetary deficits, lack of foreign currency and foreign exchange reserves falling abruptly causing devaluation and accelerating inflation grow in the short term. At the same time, fuel subsidies have been cut, reducing families’ disposable income. This dramatic rise in prices will cause a preference for foreign currency, especially US Dollars, causing a shortage in foreign currencies and stepping up exchange rates for those currencies to new heights. New Kwanza’s devaluations will mean more inflation and stress for Angolan consumers, particularly people used to have access to very expensive goods, who risk becoming the “new poor”, losing all their current life style and facing lack of liquidity sooner than they may expect.
Angolan economy external
situation, as measured by net international reserves stock and the dynamics of
average annual variation used to be healthy, representing historical enough for
"roughly" nine months of imports of goods and services.
Unfortunately, these figures are rapidly decreasing.
Decline in oil revenues forces Angola’s government to cut expenditures,
mostly by reducing public investment. GDP will decrease sharply, as
inflation and external debt rise. Budget is now experiencing a deep deficit
that is going to force reduction and stops in public investments, especially in
structural investments that would support growth in the long run. This is one
of most concerning items in current figures, as long term growth is in risk.
The sharp drop in oil prices in international markets, which began in
the second half of 2014 was a though blow to Angolan economy. That year, the
pattern of economic activity interrupted the growing trend evidenced since
2009, and is expected to slow even more significantly in 2015 and 2016. For the
second time in the past decade, the economy exhibited twin deficits, a
reflection of the preponderance of oil revenues in the balance of public and
external accounts. In the face of these adversities, Kwanza depreciated,
causing inflationary pressures that interrupted the disinflation process started
in mid-2011.
Inflation is now one of major concerns in Angolan economy as things seem
to be worse than expected by central bank. Poor people are suffering. As usual…
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