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Angola Economy
 
 
 

General

Angola has a rich subsoil heritage, from diamonds, oil, gold, copper, as well as a rich wildlife (dramatically impoverished during the civil war), forest and fossils. Since independence, oil and diamonds have been the most important economic resource. Smallholder and plantation agriculture have dramatically dropped because of the Angolan Civil War, but have begun to recover after 2002. The transformation industry that had come into existence in the late colonial period collapsed at independence, because of the exodus of most of the ethnic Portuguese population, but has begun to re-emerge, partly because of the influx of new Portuguese entrepreneurs. Similar developments can be verified in the service sector.

Angola's economy has undergone a period of transformation in recent years, moving from the disarray caused by a quarter century of civil war to being the fastest growing economy in Africa and one of the fastest in the world, with an average GDP growth of 20% between 2005 and 2007. During 2001-2010 Angola has the world's biggest annual average GDP growth with 11.1%. In 2004, China's Eximbank approved a $2 billion line of credit to Angola. The loan is being used to rebuild Angola's infrastructure, and has also limited the influence of the International Monetary Fund in the country.

The Economist reported in 2008 that diamonds and oil make up 60% of Angola's economy, almost all of the country's revenue and are its dominant exports. Growth is almost entirely driven by rising oil production which surpassed 1.4 million barrels per day in late 2005 and was expected to grow to 2 million barrels per day by 2007. Control of the oil industry is consolidated in Sonangol Group, a conglomerate which is owned by the Angolan government. In December 2006, Angola was admitted as a member of OPEC. According to The Heritage Foundation, a conservative American think tank, oil production from Angola has increased so significantly that Angola now is China's biggest supplier of oil.

The economy grew 18% in 2005, 26% in 2006 and 17.6% in 2007. However, due to the global recession the economy contracted an estimated -0.3% in 2009. The security brought about by the 2002 peace settlement has led to the resettlement of 4 million displaced persons, thus resulting in large-scale increases in agriculture production.

Although the country's economy has developed very significantly since achieving political stability in 2002, mainly thanks to the fast-rising earnings of the oil sector, Angola faces huge social and economic problems. These are in part a result of the almost continual state of conflict from 1961 onwards, although the highest level of destruction and socio-economic damage took place after the 1975 independence, during the long years of civil war.

Before independence in 1975, Angola was a breadbasket of southern Africa and a major exporter of bananas, coffee and sisal, but three decades of civil war (1975-2002) destroyed the fertile countryside, leaving it littered with land mines and driving millions into the cities. The country now depends on expensive food imports, mainly from South Africa and Portugal, while more than 90% of farming is done at family and subsistence level. Thousands of Angolan small-scale farmers are trapped in poverty.

A serious structural problem of the Angolan economy are the enormous differences between the regions. This is best illustrated by the fact that about one third of the economic activities is concentrated in Luanda and the neighbouring Bengo province, while several areas of the interior are characterised by stagnation and even regression.


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