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Debt restructuring talks inching forward

The threat of messy outcomes to Sub-Saharan Africa’s debt problems seems to have diminished recently. In Zambia, the new administration vowed to tackle debt problems and press on with restructuring talks under the G20’s Common Framework. And Ethiopia, another participant in the programme, held its first creditor meeting as a political crisis reignited debt concerns. Even so, debt restructuring negotiations will not be smooth sailing, especially following recent revelations that Zambia’s debt owed to China may be substantially larger than officially reported. And elsewhere, debt problems may come back to bite down the line. While immediate risks in South Africa and Ghana are low, policymakers will need to undertake large fiscal consolidation to stabilise public debt-to-GDP ratios.
William Jackson Chief Emerging Markets Economist
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Africa Economics Weekly

SA corruption and inflation on display, Ghana’s troubles

The president of South Africa and the ruling ANC are taking the heat as corruption accusations fly. With political bickering likely to grow, the focus on boosting the economy with much-needed reforms is likely to take a backseat. Meanwhile, we think that the latest inflation reading out of South Africa will shift the debate on the scale of further monetary tightening towards 75bp steps. And in Ghana, policymakers appear to be stepping up efforts to support the cedi but at the risk of adding to the economy's pain.

24 June 2022

Africa Data Response

South Africa Consumer Prices (May)

The rise in inflation in South Africa to an above-target 6.5% y/y in May is likely to shift the debate to a choice between a 50bp and a 75bp hike to interest rates at July’s MPC meeting. But inflation continues to be driven by food and energy price effects and, if the headline rate falls sharply over the rest of this year as we expect, interest rates will probably be raised by less than investors anticipate over 2022-24.

22 June 2022

Africa Economics Update

Where next for inflation in South Africa?

Inflation in South Africa has been close to the top of the central bank’s target range in recent months, but the country has avoided the surge in inflation seen across much of the world. And there are reasons to think that the headline rate will drop back sharply by the end of this year. That underpins our view that monetary policy will ultimately be tightened by less than investors currently expect.

21 June 2022

More from William Jackson

Emerging Europe Chart Book

Re-opening boost fades as supply disruptions mount

Economies across Emerging Europe enjoyed a rapid rebound in Q2, but all the signs suggest that the recovery has come off the boil in Q3. Surveys of sentiment in services sectors have started to flatline and, in some cases, fall. What’s more, hard activity data show that supply chain disruptions and raw materials shortages have taken a greater toll on industry. Manufacturing in Poland’s electronics sector has fallen sharply and auto sectors in Czechia and Hungary have been hit hard. We think economies will still post robust rises in GDP in Q3, but the risks lie to the downside and suggest that the regional recovery may return to a steadier pace of growth earlier than we had expected.

29 September 2021

Emerging Markets Trade Monitor

Headwinds facing metals exporters

It looks like EM exports rose further in August and, possibly, September too. And while we expect them to decline over the coming quarters, they will remain elevated. However, China’s property slowdown means that the risks to the export outlook for some metals producers are larger.

29 September 2021

Middle East Chart Book

Rise in inflation to prove short-lived

Inflation in many economies in the region has risen to multi-year highs in recent months. In general, this has been driven higher by a combination of unfavourable base effects from the pandemic, as well as some re-opening inflation and the effects of rising global commodity prices. In Oman, those effects have been compounded by the introduction of VAT in April. Most of the drivers appear to be transient and inflation is likely to slow again over 2022-23 and, in Egypt, this is likely to bring interest rate cuts back on to the agenda. One key exception is Lebanon, where inflation is already running at over 100% and will remain elevated amid the effects of the collapse in the pound and the repeal of subsidies.

28 September 2021
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