Still a region of "two-speed" growth

The latest data for South Africa suggest that the economy picked up pace in Q1, supported in large part by a rebound in mining production after last year’s strikes. Elsewhere in the region, although Q1 data is thin on the ground, there are signs that growth has slowed a little, particularly in Kenya. Nevertheless, we expect this divergence in fortunes to reverse throughout the course of 2013. Growth in South Africa is likely to stay subdued for the year as a whole, as external demand remains weak and the manufacturing sector continues to struggle. Meanwhile, growth elsewhere in sub-Saharan Africa will be solid in the next couple of years, with domestic demand being supported by robust private consumption and increasing inward foreign direct investment. As such, despite the latest developments, we remain of the view that the region will experience a “two-speed” pace of growth over the coming years.