Angola is no longer an Eldorado for Portugal



Angola is no longer what it was. This can be summarized as the importance of the country for the Portuguese economy, particularly with regard to exports, at a time when the government of João Lourenço is negotiating an economic program supported by the International Monetary Fund (IMF). A few years ago the alarm bells were in Lisbon. That is not enough.

The figures leave no doubt about it. Despite the expected acceleration of the economy this year – the IMF expects a growth of 2.2%, compared to 1% in 2017 – Portuguese exports to Angola are falling. In the first half of the year this amounted to € 740 million, 15.5% less compared to the same period in 2017. This is the period in which Portuguese goods exports generally rose by 6.6%. As a result, Angola is now only 2.5% of the total. A figure that is far from the 7.1% registered in 2009 or 6.6% in 2014. Exactly in 2014 Portugal exported more to Angola in absolute terms and reached € 3.18 billion. In 2017 this amounted to € 1.79 billion, and data from January to June announce an even lower figure for this year.

What does Portugal sell? First, machinery and equipment (24.6% of the total). This is followed by chemical products (11.5%), food and beverages (10.4%), metal (8.6%) and animal or vegetable fats, oils and waxes (6 7%).

Arrears

"Welcome." For example, Rafael Campos Pereira, vice-president of the Association of Metallurgical, Metal-mechanic and Allied Industries of Portugal (AIMMAP), classifies an economic program between Angola and the IMF. The country was, according to AIMMAP, the sixth destination of exports in the sector in 2017 with € 519 million (3.2% of the total). And performance in the first half of 2018 was negative, with a decline of 6.8% year-on-year to € 228 million. "What we observed in the first half of the year reinforces the need for an economic program with the IMF that stimulates public and private investment," says Rafael Campos Pereira. He adds: "In recent years we have limited the export and business of our associated companies in Angola."

Statement? "One of the reasons is a very large payment risk," says Rafael Campos Pereira. "There are many companies that have difficulty paying a year, two years or even three years of credit," he said, and he also noted that it is difficult to take money from Angola. So, "the injection of credibility and funding associated with an IMF program will be interesting." Even for "the diversification of the Angolan economy, promoting the sustainability of the country, and where the metallurgical and metal-mechanical sector can help," says Rafael Campos Pereira.

As far as Portuguese imports from Angola are concerned, they can be summarized in one word: oil. The sector is decisive for the economy of the country – this should account for 25.5% of GDP this year – and for government revenues. The IMF expects central government revenue to reach 18.2% of GDP in 2018, and the bulk will come from oil (11.7% of GDP).

Portuguese purchases of goods from Angola illustrate this reality well. In the first half of 2018 they reached € 430 million, almost four times more than in the same period of 2017. And mineral products (including petroleum products) accounted for 97.6% of the total.


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