Angola's capital Luanda is world's most expensive: ECA

LUANDA (Reuters) - Angola’s capital Luanda is the world’s most expensive place for foreigners followed by Tokyo, a public relations director for London-based human resources consultant ECA International said on Wednesday.

Josephine Woolley based her comments on a recent ECA survey which compares a basket of 125 consumer goods and services commonly purchased by expatriates in more than 270 locations.

She said long delays at Luanda’s port and damaged infrastructure caused by an almost three-decade long war continued to inflate the price of goods and services typically used by foreigners in the oil-and-mineral rich nation.

“Luanda is still suffering from the aftermath of 27 years of war. It remains dangerous, is difficult to move around safely, and it is hard to source goods of a reasonable standard there because of a damaged infrastructure,” she told Reuters.

“These factors, along with inflation, have driven up cost of living, making it increasingly expensive for expatriates.”

The end of the war in 2002 led to an investment boom by China and some Western nations which has helped turn Angola into one of the world’s fastest growing economies. The boom also helped push prices to record highs.

Despite a recent sharp drop in world food prices, a litre of imported milk can cost $3 while the rent of a small two-bedroom apartment can easily fetch $7,000 a month in a city that was built for 500,000 but is home to over five million people.

Analysts expect the cost of living in Luanda to remain high. The economy is forecast to grow 11.8 percent in 2009 and inflation to remain above 10 percent, government estimates show.

“Prices of goods for expatriates should remain high due to strong demand,” said Ricardo Gazel, a senior economist at the World Bank in Angola, noting the bottleneck at Luanda’s port.

Angola, which rivals Nigeria as sub-Saharan Africa’s biggest oil producer, was a major food exporter before a civil war devastated its agricultural sector as well as its roads, bridges and communications.

Woolley said the Japanese capital had risen up the ranks in terms of prices in the past year.

“A strong yen has made Tokyo the second-most expensive city in the world, up from 13th position a year ago,” she said.

Zimbabwe’s capital Harare used to be considered the world’s most expensive city by ECA but the human resources company stopped including Zimbabwe in the ranking because of spiralling inflation there, said Woolley.