IMF Trims Angola Growth Forecast, Threatening Portuguese Exports and Remittances

Angolan engines, already sputtering, just received another dose of caution: the International Monetary Fund quietly cut its flagship forecast to 2.1%, confirming that Angola will grow markedly slower than the April outlook had assumed this year. For an oil-reliant economy that many Portuguese exporters and migrants follow closely, the message is loud even if the headline number seems small.

A thinner cushion for Africa’s 2nd-largest oil producer

Even before the latest update, Luanda had been leaning on its dwindling hydrocarbon cushion. The IMF downgrade trims the projection from 2.4% to 2.1%, leaving the government with far less fiscal breathing space than the Orçamento Geral do Estado had pencilled in. With Brent crude hovering below $80, every lost dollar chips away at the funds Angola uses to pay teachers, import wheat and service external debt. European traders have also noticed a dip in Soyo’s light-sweet cargoes, a reminder that the country’s mature offshore fields are pumping less each quarter. Portuguese banks operating in Luanda—especially BCP’s stake in Banco Millennium Atlântico—acknowledge privately that loan-loss provisions will have to stay high until the growth engine restarts.

Behind the downgrade: oil, debt and dollars

Washington’s economists blame three intertwined forces: volatile oil prices, tighter global financing, and stubborn production declines. Angola still earns about 90% of export revenue from petroleum, so the double shock of weaker prices and falling volumes hits both the current account and the kwanza in one stroke. Meanwhile, higher US Treasury yields have lifted the cost of refinancing dollar bonds maturing in 2026-2027. That forces Luanda to tap domestic banks for cash, squeezing liquidity. The Bank of Angola’s repeated interventions to smooth the kwanza’s slide have burned through reserves, yet the currency is down roughly 9% versus the dollar this year. Add a debt-service bill that the IMF estimates at 12% of GDP in 2025, and the downgrade looks more like a warning than a minor adjustment.

Lisbon’s stake in Luanda’s growth

For Portugal, slower Angolan growth is more than a footnote. Roughly 1,000 Portuguese companies export goods or services to Angola, making it the biggest non-EU destination for Portuguese SMEs after Brazil. Construction group Mota-Engil still counts on Angolan contracts for a sizeable chunk of revenue, while telecoms operator Unitel remains an important dividend stream for several Portuguese investors. Remittances also flow the other way: the Instituto Nacional de Estatística says transfers from the Angolan-Portuguese community reached €270 M last year, cushioning household spending in the Algarve and the North. If oil receipts continue to sag, those remittances—and orders for cork, wine and engineering services—could soften quickly.

How Luanda plans to regain momentum

President João Lourenço’s team is scrambling to prove that the diversification mantra is more than a slogan. The 2025 Plano Anual de Desenvolvimento Nacional earmarks funds for 1,400 public-investment projects in energy, roads and irrigation, with the aim of lifting non-oil GDP by 4.2%. The finance ministry has also pledged to phase out fuel subsidies, a politically risky step seen as vital to free up resources for health and education. On the monetary front, the Banco Nacional de Angola is weighing a modest rate cut once inflation, projected at 16.6%, shows clearer signs of retreat. Officials hope the forthcoming Novo Consórcio de Gás will bring fresh dollars and diversify exports; yet most analysts caution that meaningful gains will take years, not quarters.

Competing forecasts and what could still go right

Not every institution is as downbeat as the Fund. The Banco Mundial maintains a 2.9% view for next year, while the Economist Intelligence Unit foresees an average 3.5% through 2028. Even the central bank, buoyed by better-than-expected maize and coffee harvests, still talks of a 3.5% expansion in 2025. Key swing factors will be OPEC+ production quotas, the pace of US rate cuts, and whether the kwanza stabilises long enough to rebuild business confidence. For now, though, the IMF’s 2.1% acts as a reality check: without a stronger non-oil engine, Angola—and the many Portuguese enterprises intertwined with it—will keep living from oil barrel to oil barrel.