Recoveries lifted by the commodity high… for now

The sharp rises in copper and iron ore prices this month will have given a much-needed boost to African producers such as Zambia and South Africa. Gold also traded higher in April compared to March, supporting recoveries in the likes of Côte d’Ivoire, Ghana, Rwanda, Tanzania and Uganda. And while the rebound in oil prices stalled a bit this month, Brent crude has risen a long way from last year’s trough. Balance sheet strains in the region’s key oil producers Nigeria and Angola are probably easing already. Nonetheless, we expect that metals prices will begin to fall back later this year, and oil in 2022, removing this prop to the recovery.
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Africa Economics Weekly

Recoveries trembling under new virus variant threat

A concerning new virus variant identified in Southern Africa has already prompted the re-imposition of restrictions on travellers from the region and triggered a flight to safety in global financial markets. A tightening of local containment measures is likely to follow, dampening economic activity, and the threat of a new virus wave will linger.
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. 

26 November 2021

Africa Economics Update

CBN maintains interest rates, but hints at policy shift

The Central Bank of Nigeria kept its benchmark rate on hold at 11.50% today, but the statement signalled that monetary policy normalisation is now on the horizon. While we don’t expect interest rates to be raised imminently, we have pencilled in 200bp of hikes over 2022-23.

23 November 2021

Africa Economics Weekly

African central banks and the EM rate hike club

This week, the South African Reserve Bank joined its EM counterparts in tightening monetary policy, but we don’t think that policymakers in South Africa will raise interest rates as aggressively as central banks across Emerging Europe and Latin America. Elsewhere, a further fall in inflation last month and soft Q3 GDP figures mean that Nigeria’s central bank is unlikely to join the EM rate hike club any time soon.

19 November 2021

More from Africa Economics Team

Africa Chart Book

Contrasting currency tales

Currencies of the two biggest economies in Africa have had contrasting fortunes recently, with Nigeria’s official naira exchange rate recently devalued but the South African rand soaring on the back of higher metals prices. Nigerian policymakers have taken a step in the right direction but, while we expect further falls in the naira, the authorities will stop short of the unified and fairly valued exchange rate than many are hoping for. Meanwhile, the star performance of the rand is unlikely to last as we expect most commodity prices to fall back, and that US long-term yields will begin to rise again, putting renewed pressure on EM currencies. In addition, we think the SARB will not tighten policy as quickly as investors now discount, and that concerns about South Africa’s fiscal situation will eventually resurface.

27 May 2021

Africa Economic Outlook

Recovery in slow motion

Slow vaccine rollouts, tight fiscal policy and weakness in tourism sectors will hold back recoveries across Sub-Saharan Africa. Virus containment measures will probably remain in place for some time, depressing activity. Meanwhile, some countries, like South Africa and Angola, are turning to austerity to tackle worrying debt trajectories. Debt restructuring is already underway in some places and risks remain high in Kenya and Ghana. Elevated commodity prices will provide support to oil producers (Nigeria, Angola), industrial metal exporters (South Africa, Zambia) and gold producers (Uganda, Tanzania). But GDP across most of Sub-Saharan Africa is likely to stay well below its pre-crisis path over 2021-23.

28 April 2021

Africa Data Response

South Africa Manufacturing PMI (Jun.)

South Africa’s manufacturing PMI picked up in June, but it still points to a poor performance in Q2. While the survey sometimes provides misleading readings, its consistent weakness suggests growth was sluggish.

1 July 2019
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