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Country Risk Analysis Report (Edition) Emerging Market Countries – Angola



Country Trade Risk Index (ERI): 99.84 Country risk reference rating: level 7 (7/9) Country Risk Outlook: Stable Economic and trade risks Angola is a least developed country. It implements a market economy and h…

Country Trade Risk Index (ERI): 99.84

Country risk reference rating: level 7 (7/9)

Country Risk Outlook: Stable

Economic and trade risks

Angola is a least developed country. It implements a market economy and has a certain industrial base. It is one of the countries with the fastest economic growth in Africa. It is currently in the post-war reconstruction and industrialization stage, with strong market demand, abundant resources, and a large Development potential. Oil export revenue is still the main driving force to support the development of its national economy, and the impact of international oil price fluctuations on Angola’s economy is still obvious. In 2012, Angola’s nominal GDP was US$122.48 billion, per capita GDP was US$6,070, and the real economic growth rate was 3.8%. The country’s industrial structure is agriculture (10.3%), industry (61.2%), and service industry (29.6%). The Angolan government has always regarded developing the private economy and reducing unemployment as one of its priorities. However, due to the lack of investment capacity of private enterprises, the situation has not been significantly improved. The crowding-out effect of public investment is obvious, and the unemployment rate in Angola remains high.

Business environment

Angola’s business environment is poor. Corporate public financial information is difficult to obtain, power infrastructure is insufficient, and contract execution efficiency is low. However, Angola is above the regional average in terms of electricity supply and investment protection. Administrative corruption in the Angolan government is relatively common, with low administrative efficiency, low transparency, and prevalent bureaucracy. Angola implements economic liberalization policies, opens its market to the outside world, and welcomes foreign investment in most economic fields, but investment in the oil field must comply with local regulations. Angola is a country in the world where the cost of terminating operations for foreign investors is relatively high, and the cost of final cessation of operations due to bankruptcy is higher than the average cost in the African region. Angola has no laws regulating competition, and it will be difficult to introduce them in the short term. Angola has many environmental laws and regulations, but their enforcement is weak. Angola’s transportation facilities were severely damaged during the civil war. With the post-war reconstruction work and the entry of external funds, the condition of roads and railways has improved, and railway transportation capacity has been enhanced.

Bilateral economy and trade

The trade between China and Angola is highly complementary. Angola’s rich oil resources provide necessary energy for China’s economic development. China’s capital goods and consumer goods are suitable for Angola’s needs in terms of price and technology. Currently, China is Angola’s largest trading partner, and Angola is China’s largest trading partner in Africa. In terms of investment, China is Angola’s fourth largest source of foreign investment, and the project contracting field is developing rapidly. The existing problem in bilateral economic and trade cooperation is trade imbalance. China has a large trade deficit and a single trade commodity structure. In recent years, Chinese workers have been repeatedly treated with hostility in Angola, and there have even been incidents of robbery or vicious injuries, highlighting the problems of Angola’s domestic investment environment and the differences between the two sides in terms of business methods and corporate social responsibilities. The two countries are thousands of miles apart, have inconvenient transportation, fragile transportation lines, and large cultural differences such as language, which have also hindered the development of economic and trade cooperation to a certain extent.

Overall risk assessment

Generally speaking, Angola’s political situation is stable. However, in the context of serious corruption problems, slow improvement in people’s living standards, widening gap between rich and poor, and continued instability in the Middle East and North Africa, there are also some unstable factors in Angola’s political situation. In addition, the succession issue may cause political disputes. Angola’s economic structure is single, its economic development is overly dependent on the oil industry and foreign investment, and it is susceptible to changes in the international economic environment. Domestic consumption level is low, private investment capacity is weak, unemployment rate remains high, poverty rate is high, the gap between rich and poor is large, and imported inflation pressure is high.

Based on the analysis and assessment of the current overall situation, Angola’s country trade risk index (ERI) is 99.84, the country risk reference rating is 7 (7/9), the country risk level is significant, and the country risk outlook is stable.

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Author: clsrich

 
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