Angola Economy  

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ANGOLA Economy

Budget: Income ... $928 million

Expenditure ...$2.5 billion

GDP: Purchasing power parity—$51.9 billion (2006 est.)

GDP per capita: $4000 (2006 est.)

GDP: Real growth rate: 14% (2006 est.)

Inflation rate (consumer prices): 13.2% (2006 est.)

Labor force: 6.3 million (2006 est.)

Main Crops: Bananas, sugarcane, coffee, sisal, corn, cotton, manioc
(tapioca), tobacco

Natural Resources: Petroleum; diamonds, iron ore, phosphates,
feldspar, bauxite, uranium, and gold

Major Industries: Cement; basic metal products; fish processing;
food processing; brewing; tobacco products;
sugar; textiles

Angola's high growth rate is driven by its oil sector, with record oil prices and rising petroleum production. Oil production and its supporting activities contribute about half of GDP and 90% of exports. Increased oil production supported 12% growth in 2004, 19% growth in 2005, and nearly 17% growth in 2006. A postwar reconstruction boom and resettlement of displaced persons has led to high rates of growth in construction and agriculture as well. Much of the country's infrastructure is still damaged or undeveloped from the 27-year-long civil war. Remnants of the conflict such as widespread land mines still mar the countryside even though an apparently durable peace was established after the death of rebel leader Jonas SAVIMBI in February 2002. Subsistence agriculture provides the main livelihood for half of the population, but half of the country's food must still be imported. In 2005, the government started using a $2 billion line of credit from China to rebuild Angola's public infrastructure, and several large-scale projects were completed in 2006. The central bank in 2003 implemented an exchange rate stabilization program using foreign exchange reserves to buy kwanzas out of circulation, a policy that was more sustainable in 2005 because of strong oil export earnings, and has significantly reduced inflation. Consumer inflation declined from 325% in 2000 to about 13% in 2006, but the stabilization policy places pressure on international net liquidity. To fully take advantage of its rich national resources - gold, diamonds, extensive forests, Atlantic fisheries, and large oil deposits - Angola will need to continue reforming government policies and to reduce corruption. The government has made little progress on reforms recommended by the IMF such as promoting greater transparency in government spending and continues to be without a formal monitoring agreement with the institution. Corruption, especially in the extractive sectors, is a major challenge facing Angola.