Think tank overview

The Economist Intelligence Unit (EIU), in its latest overview of Angola, reported that the government has made some military gains in the east, although UNITA has staged further attacks. These attacks underline that it retains its capacity for disruption. In response to growing pressure from the peace movement, the government is attempting to appear less inflexible with regard to negotiations, although its offers will remain short of anything UNITA will accept, the EIU said. On the economic front, forecast increases in oil production over 2001-02 have been lowered, leading to a much lower forecast of real GDP growth. Falling exports will result in a widening current-account deficit. Officially the government is committed to wide-ranging economic reform under its agreement with the International Monetary Fund (IMF) for a Staff-Monitored Programme (SMP). The SMP, agreed in April, is intended to establish macroeconomic stability, promote poverty reduction and dismantle the state controls and distortions that have led to widespread corruption and inefficiency, the EIU report said. Real GDP growth will be strong over the 2001-02 forecast period, with higher oil prices and output. However because of technical difficulties in the various new and established oilfields in Angola, EIU has lowered its forecast for oil production to 760,000 barrels a day in 2001 and 900,000 barrels a day in 2002. Owing to the lower oil production, EIU has adjusted its forecast for real GDP growth in 2001 down sharply to 2.1 percent, although it is expected to rebound in 2002 to 5.1 percent. As is now well established, the energy-driven pattern of growth will be extremely capital-intensive and import-dependent, with few linkages to other sectors of the economy or effects on employment. Even accounting for the war, economic performance will remain well below potential owing to pervasive economic distortions, corruption and inefficiency.