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Emerging virus waves clouding recoveries beyond SA

Much attention has been devoted to the Omicron-fuelled fourth COVID-19 wave ripping through South Africa but cases have picked up elsewhere in Sub-Saharan Africa as well, with especially sharp rises in Nigeria and Namibia. There are early signs of virus waves taking hold in Kenya and Ghana too. But so far African policymakers are following their peers in South Africa with a “wait and see” approach before tightening economically-damaging restrictions on activity. Were healthcare systems to come under strain, governments’ hands may be forced and past form suggests that stringent containment measures pose the biggest risk to economic recoveries in Kenya, Rwanda and Uganda. Meanwhile, tourism-dependent economies will probably suffer either way. Even if travel restrictions are rowed back, any green shoots in tourism sectors are likely to wither amid virus concerns. Note: Central Bank Drop-In – The Fed, ECB and BoE are just some of the key central bank decisions expected in this packed week of meetings. Neil Shearing and a special panel of our chief economists will sift through the outcomes on Thursday, 16th December at 11:00 ET/16:00 GMT and discuss the monetary policy outlook for 2022.
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Africa Economics Update

CBN finally steps up to curb inflation

The Central Bank of Nigeria delivered a surprise 150bp interest rate hike, to 13.00%, today amid mounting inflation and balance of payments concerns. We expect rates to be raised by another 100bp, to 14.00%, in July but further tightening seems unlikely especially as the 2023 elections come into view.

24 May 2022

Africa Data Response

Nigeria GDP (Q1)

Nigeria’s GDP growth slowed to 3.1% y/y in Q1 as robust growth in the non-oil sector was more than offset by a slump in the oil sector. Looser fiscal policy ahead of elections in early 2023 will provide some support to activity going forward, but continued weakness in oil production and disruptions caused by draconian FX policies underpin our below-consensus forecast for growth of 2.3% over 2022 as a whole.

23 May 2022

Africa Economics Weekly

Markets and monetary policy, mounting pressure on naira

Recent investor risk-off sentiment has pushed up sovereign dollar bond yields across Sub-Saharan Africa, fuelling debt risks further, and has put currencies under pressure. Central banks appear to be taking note, with some policymakers turning tightening cycles up a notch. In Nigeria, the recent weakness of the currency on the black market was attributed to election-related spending, but the bigger issue is that downward pressure on the naira stems from the central bank’s unorthodox FX policies.

20 May 2022

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Africa Chart Book

Omicron shines spotlight on low vaccine coverage

The emergence of the Omicron strain of COVID-19 reinforces the need to boost vaccine coverage in Sub-Saharan Africa from current low levels. Most countries have administered at least one vaccine dose to less than 20% of their populations. The South African authorities’ initial response to the ‘Omicron threat’ was to urge the take-up of vaccines, rather than tightening containment measures. And so long as vaccine coverage is low, the risk of intermittent curbs on activity to relieve strains in health care sectors will linger with future virus waves and variants. Achieving such vaccine coverage will probably take some time even as Africa’s vaccine supplies – including from China and India – look set to increase over the coming quarters.

30 November 2021

Africa Chart Book

Hope on vaccines, but still a long way to go

COVID-19 vaccine coverage remains pitifully low across much of Sub-Saharan Africa, with less than 10% of populations having received at least a first dose in most countries. But there are signs that things may be slowly turning a corner. The rate of vaccination has picked up in recent weeks and there are growing hopes that this trend will continue as the supply of vaccines to the continent improves. That said, there is still a long way to go to reach the high vaccine coverage achieved in other parts of the world. What’s more, even as supply improves, other hurdles such as logistical challenges and vaccine hesitancy may still hinder progress. In the meantime, the region will remain vulnerable to fresh virus outbreaks and the threat of tighter restrictions will continue to cast a cloud over the economic outlook.

28 October 2021

Africa Economic Outlook

Headwinds beyond vaccine woes intensifying

Extremely low vaccine coverage continues to cast a dark cloud over recovery prospects in Sub-Saharan Africa and this will be compounded by deteriorations in the terms of trade and tighter fiscal policy. As a result, rebounds in most economies will lag behind other EMs. Sovereign debt risks look acute in Ethiopia and are growing in Ghana, while South Africa faces a slow-burning problem.

27 October 2021
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