Economy loses traction in the fourth quarter

Growth hits a 10-year high overall in 2024: The economy ended 2024 on a weaker footing, expanding 3.6% year on year in Q4, undershooting Q3’s stellar 5.5% rise. On a seasonally adjusted quarter-on-quarter basis, economic activity decelerated sharply from Q3’s downwardly revised 2.2% rise, increasing just 0.1% in Q4. Still, economic growth climbed to a decade high of 4.4% overall in 2024 (2023: +1.1%).

Shrinking oil sector leads slowdown: The hydrocarbons sector contracted 0.8% year on year in Q4, swinging from Q3’s 3.0% expansion, weighed on by a 3.5% decline in oil production (Q3: +1.5% yoy) amid operational challenges. Meanwhile, non-oil output growth cooled to 5.0% year on year (Q3: +6.3% yoy). Manufacturing production growth slowed to a year-and-a-half low, and momentum in agriculture eased. Moreover, the transport sector slowed to a near halt, and domestic trade lost steam, capping services output. That said, the overall non-oil expansion remained notably above pre-pandemic levels: Mining and quarrying growth accelerated in Q4 from Q3, and construction activity expanded at the fastest clip in three years.

Sluggish hydrocarbons supply to dent growth: Our panel expects GDP growth to be slowing to a crawl in Q1 2025, due to elevated interest rates and inflation, maturing oil fields and the USAID freeze—USAID represents around 20% of total international aid in Angola. Over 2025 as a whole, our Consensus is for the economy to decelerate from 2024 as a stagnating oil sector drags on public spending and exports. Still, economic growth should remain strong by pre-pandemic standards, supported by healthy private spending.

Panelist insight: Oxford Economics’ Gerrit van Rooyen commented: “Following a rebound in crude oil production in 2024, we expect output growth will moderate this year which will curb overall economic growth. We expect diamond production will also stall this year, due to the continued weakness in global diamond demand. Nevertheless, short-term real GDP growth will be supported by increased investment in mineral exploration, oil & gas refining, transport infrastructure, and solar energy; as well as the continued privatisation drive.”

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