Commodity price rally no panacea for Africa

The recent rally across almost all commodity prices is good news for resource-rich economies in Sub-Saharan Africa. Balance sheets in oil producing countries like Nigeria and Angola will get a boost from the pick-up in oil prices. And a surge in industrial metals prices will prop up mining revenues in South Africa and Zambia. But alas, it’s not quite that straightforward. While we think that oil prices will rise further in the coming quarters, this is unlikely to be sufficient to fully alleviate balance of payments strains of key producers in the region. What’s more, most other African countries are facing higher oil import bills and inflation pressures. Meanwhile, we suspect that industrial metals prices will drop back later in the year as China’s economy cools, turning a tailwind into a headwind for Zambia and South Africa among others.
William Jackson Chief Emerging Markets Economist
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Drop-In: The B.1.1.529 strain – The economic and markets impact 10:00 ET/15:00 GMT, Friday 26th November Group Chief Economist Neil Shearing will be joined by senior economists from across our services at 10:00 ET/15:00 GMT today to give their views and answer your questions about the potential economic and markets impact of this new virus strain. Click here to register and to submit your questions ahead of the session. 

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