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Africa

Africa Economics Update

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

Africa Economics Update

Signs of Nigeria’s recovery decelerating further

The latest data from Nigeria suggest that the economic rebound slowed further at the start of Q2, and we think that the recovery will remain lacklustre over the coming quarters. The weakness of the economy may give monetary policymakers second thoughts about maintaining an aggressive pace of tightening. World with Higher Rates - Drop-In (21st June, 10:00 ET/15:00 BST): Does monetary policy tightening automatically mean recession? Are EMs vulnerable? How will financial market returns be affected? Join our special 20-minute briefing to find out what higher rates mean for macro and markets. Register now  

16 June 2022

Africa Economics Update

Tanzania: near-term struggles, long-term outlook brighter

Unfavourable shifts in commodity prices, the effects of drought and a slow rebound in the tourism sector will hold back Tanzania’s economy over the next couple of years. But while the near-term outlook is weaker than most think, President Hassan’s reversal of her predecessor’s anti-business policies bodes well for the country’s longer-term outlook. India Drop-In (8th June, 10:00 ET/15:00 BST): We’ll be discussing India’s growth, inflation and policy outlook in the wake of the RBI’s June meeting, including what to do about the rupee. Register now.

6 June 2022
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Africa Economics Update

War in Ukraine inflames food insecurity in Africa

The outsize role of agriculture in Sub-Saharan African economies and the tendency to rely on imported food products makes the region particularly vulnerable to the agricultural shock caused by the war in Ukraine. In addition to the risk of food shortages, external – and in some cases fiscal – positions are set to weaken. The accompanying rise in inflation will add to the economic pain on the back of the conflict.

Africa Economics Update

CBN finally steps up to curb inflation

The Central Bank of Nigeria delivered a surprise 150bp interest rate hike, to 13.00%, today amid mounting inflation and balance of payments concerns. We expect rates to be raised by another 100bp, to 14.00%, in July but further tightening seems unlikely especially as the 2023 elections come into view.

Africa Economics Update

Hawks’ majority in SARB to be short-lived

Policymakers in South Africa upped the pace of tightening today, raising the repo rate by 50bp to 4.75%, as concerns about inflation (and inflation expectations in particular) have grown. We don’t think that the hawks will have their way for long though as the tightening cycle is likely to revert to a more gradual pace from the second half of this year.

Africa Economics Update

A primer on South Africa’s monetary policy reform

The South African Reserve Bank is set to shake up its monetary policy setup. This Update provides some clarity on what policymakers will do and why, and what it means for monetary and credit conditions. 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.

Africa Economics Update

SARB will continue to tighten slowly

South Africa’s headline inflation rate will stay close to the upper bound of the central bank’s 3-6% target range in the coming months before falling sharply in the second half of the year. Some MPC members are in a hawkish mood, but we think that interest rates will be raised more slowly than investors expect.

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