Africa Economics Update

Africa Economics Update

What to expect in Sub-Saharan Africa in 2022

Sub-Saharan Africa will remain a laggard in the global recovery. The weak economic backdrop means that South Africa’s government is unlikely to stick to its austerity plans and the debt ratio will rise more quickly than most anticipate. Debt risks are also likely to build in other parts of the region. Meanwhile, Nigerian officials will probably double down on their unorthodox policies. Drop-In: Neil Shearing will host an online panel of our senior economists to answer your questions and update on macro and markets this Thursday, 13th January (11:00 ET/16:00 GMT). Register for the latest on everything from Omicron to the Fed to our key calls for 2022. Registration here.

12 January 2022

Africa Economics Update

The latest on South Africa’s Omicron experience

The recent sharp fall in virus cases in South Africa provides an early encouraging sign that Omicron-driven outbreaks may run their course relatively quickly. In South Africa’s case, the health system has come under much less pressure than it did during the last (Delta) wave, allowing the government to maintain light-touch restrictions. As a result, it looks like the economic hit will be modest and short lived.

5 January 2022

Africa Economics Update

Omicron lessons from South Africa

South Africa’s experience with Omicron so far offers tentative hope to other economies since it hasn’t pushed up the incidence of very severe illness in the same way that the Delta wave did. The economic impact will depend on how policymakers respond, which will vary across countries. In South Africa’s case, the government has avoided tighter restrictions and, for now, activity doesn’t seem to have been affected. Instead, the focus has been on encouraging people to get vaccinated, but take up hasn’t picked up by nearly as much as the government probably hoped for. In light of the broad interest in this issue, we are making this report available to all clients.

13 December 2021
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Africa Economics Update

Nigeria’s recovery losing some steam

Timely activity figures suggest that Nigeria’s economy lost momentum in early Q4 as oil sector woes continued and the non-oil economy’s recovery slowed. Headwinds have only built since.

Africa Economics Update

Debt sustainability in Zambia: mission impossible?

Zambia’s new administration has made encouraging noises about restoring macroeconomic stability and addressing the country’s public debt problem. But it will be a tall order to secure a large restructuring and stick to the fiscal consolidation that will be needed to leave the public debt ratio on an even keel.

Africa Economics Update

We anticipate that the rand will remain weak

The South African rand has rallied over the past few days after reaching its lowest level against the US dollar in more than a year following last week’s news about the Omicron variant. Even if the new variant doesn’t lead to a major round of renewed virus containment measures, we think that the currency will remain under pressure from both domestic and external headwinds for much of 2022. In view of the wider interest, we are also sending this FX Markets Update to clients of our Africa Economics Service

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 Update

SARB: lift-off for rates, but tightening cycle to be slow

The South African Reserve Bank fired the starting gun on monetary policy normalisation with a 25bp hike in the repo rate, to 3.75%, today amidst growing concerns about inflation risks. But the statement lends support to our view that interest rates will be raised more slowly than investors expect over 2022-23.

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