Angola's Economic Resilience and Cameroon's Revitalization with FocusEconomics

The March 2024 FocusEconomics Consensus Forecast on sub-Saharan Africa has noted that economic growth should quadruple this year from 2023 on stronger domestic demand—despite higher inflation and interest rates— and a rebound in exports amid rising oil production. Moreover, increasing mining and construction activity will add impetus.

Social unrest owing to the cost-of-living crisis is a downside risk.

The March 2024 FocusEconomics Consensus Forecast Sub-Saharan Africa states that the Angolan economy picked up pace in Q3, growing by 1.4% annually after a previous quarter of stagnation. This growth was driven by increased agricultural and industrial activity, with oil and mining output seeing slower declines.

In Q4/2023, growth is expected to accelerate further, primarily due to a rebound in oil production, marking the first expansion in over a year. However, tighter monetary policies and higher inflation may have impacted domestic demand.

In late January 2024, the United States committed over $900 million to solar energy projects and $250 million for upgrading the Lobito Atlantic Rail Line, crucial for transporting minerals from central Africa. While this investment is positive for construction, regional integration, and trade, it raises concerns about potential challenges in securing additional Chinese loans, given existing loans exceeding $40 billion.

Angola's economic growth is anticipated to quadruple in 2024 compared to 2023, driven by robust domestic demand despite higher inflation and interest rates. A rebound in exports, particularly from increased oil production and growth in mining and construction activities, is expected to contribute to this acceleration.

However, social unrest stemming from the cost-of-living crisis poses a downside risk. According to FocusEconomics panellists, Angola's GDP is projected to expand by 2.1% in 2024, unchanged from the previous month, and further increase to 2.8% in 2025.

Inflation in Angola reached a 19-month high of 22.0% in January, up from December's 20.0%, driven by a weaker kwanza and the removal of fuel subsidies in June 2023. This trend is expected to persist in 2024, with panellists anticipating an average inflation rate of 20.7%, up by 0.3 percentage points from the previous month and a further increase to 15.5% on average in 2025.

Cameroon

In the latter half of 2023, Cameroon's economic growth found support in robust domestic demand, although it faced constraints due to a lacklustre performance in the hydrocarbons sector. Q3/2023 witnessed a moderation in average inflation compared to Q2/2023, providing some relief to household budgets. However, the hydrocarbons sector, particularly oil production, contracted at a more significant year-on-year rate in Q3, and this trend persisted into Q4.

Despite lower inflation levels, the decline in oil output during October posed challenges to export revenue. However, in a noteworthy development, the IMF sanctioned a climate financing program of $183.4 million for a duration of 18 months on January 29.

These funds are earmarked to bolster Cameroon's resilience against climate change and reinforce institutional frameworks for effective policy implementation. Looking ahead, FocusEconomics panellists anticipate a revitalization of economic growth in Cameroon starting in 2024, fueled by heightened private consumption resulting from lower inflation and an uptick in exports.

Additionally, advancements such as the completion of the Nachtigal dam and enhancements to the domestic electricity grid are poised to enhance the country's energy supply. According to FocusEconomics predictions, GDP in Cameroon is expected to expand by 4.2% in 2024, a projection that remains unchanged from the previous month, with a further increase to 4.6% anticipated in 2025.