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South Africa Activity Data (Mar.)

South Africa’s activity data for March were weak and that was even before flooding in KwaZulu-Natal province dealt a fresh blow to the economy. Inflation figures released earlier today may have increased the risk of a 50bp interest rate hike tomorrow but, with the recovery likely to remain slow and bumpy, we continue to think that rates will be raised more slowly than most expect over the next couple of years.
Jason Tuvey Senior 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 Jason Tuvey

Africa Data Response

South Africa Consumer Prices (Apr.)

South Africa’s headline inflation rate remained close to the upper bound of the Reserve Bank’s 3-6% target range in April, at 5.9% y/y, and will stay there over the coming months. Tomorrow’s interest rate decision will be a close call between a 25bp (our forecast) and a 50bp hike but, given the slow and bumpy recovery, we continue to think that rates will be raised more slowly than investors expect over 2022-24.

18 May 2022

Emerging Europe Data Response

Turkey Industrial Production & Retail Sales (Mar.)

Turkey’s activity data for March suggest that the economy held up better than expected in Q1 as a weak lira appears to have supported industry, while policies to preserve households’ purchasing power have limited the downturn in retail sales. But spillovers from the war in Ukraine mean that, for now, we are sticking with our below-consensus forecast for GDP growth of 0.3% this year. EM Drop-In (17th May): Do current EM debt strains point to a repeat of the kinds of crises seen in the 1980s and 1990s? Join our special briefing on EM sovereign debt risk on Tuesday. Register now.  

13 May 2022

Africa Economics Weekly

SA recovery falters, wage talks, Kenya’s soft start to 2022

Recent flooding in a key province and warnings this week that power cuts could reach unprecedented levels are the latest in a long list of blows to South Africa’s economy that have repeatedly stifled any emerging growth momentum. Meanwhile, South African trade unions’ opening offer in public sector wage negotiations will almost certainly be rebuffed, but we expect that the government will ultimately concede some ground. Elsewhere, Kenya’s statistics office confirmed this week that its economy expanded by 7.5% last year but more timely indicators point to weakness so far this year.
China Drop-In (12th May, 09:00 BST/16:00 SGT): Join our China and Markets economists for a 20-minute discussion about near to long-term economic challenges, from zero-COVID disruptions to US-China decoupling. Register now.

6 May 2022
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