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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

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 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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