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Region to lag behind as debt risks mount

Sub-Saharan Africa’s economic recovery from the pandemic is likely to remain one of the weakest of any region over 2022-23 and our GDP growth forecasts are generally below the consensus. The latest virus waves already seem to be ebbing, but low vaccination rates will keep much of the region vulnerable to possible future outbreaks. In the meantime, lower commodity prices and fiscal austerity will hold back growth. Despite tight fiscal policy, public debt risks will continue to mount in much of the region.
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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

Omicron waves in the rear view mirror

Waves of the Omicron variant that spread across the region in December have subsided sharply in recent weeks. And timely survey and mobility data point to a smaller hit from these latest waves compared with previous ones. But the good news will probably be in short supply going forward. Low vaccination rates mean that the region remains vulnerable to future virus waves. What’s more, other headwinds are likely to grow. We expect commodity price moves to turn increasingly unfavourable. And policy support will be thin on the ground with officials pursuing austerity and/or shifting to tighten monetary policy.

31 January 2022

Africa Chart Book

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.

16 December 2021

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
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