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Assessing public debt risks in Africa

In this Update, we roll out our sovereign debt heat map that provides a snapshot of debt risks across Sub-Saharan Africa. The pandemic has increased debt burdens across the continent and, with elections on the horizon in many places, governments are unlikely to push through the austerity needed to stabilise debt. While the rise in commodity prices caused by the war in Ukraine is a positive for some (e.g. Angola), tighter external financing conditions pose significant risks for others (e.g. Ghana). Long Run Outlook Drop-In (23 March, 11:00 EDT/15:00 GMT): What will be the lasting impacts of the war in Ukraine? What legacies will the pandemic leave? What does a future of higher inflation mean for economies and markets? Neil Shearing hosts this special discussion with senior economists about the long-term investing outlook on Wednesday. Register here.
Virag Forizs 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 Virag Forizs

Africa Economics Weekly

Cost of FX policies rising in Nigeria, fuel price cap in SA?

Evidence is building that Nigeria’s unorthodox exchange rate policies are fuelling inflation and increasingly damaging economic activity. Meanwhile, the authorities in South Africa are reportedly considering options to shield consumers from high fuel costs. Recent fiscal improvements may just give officials room to put such measures into effect.

18 March 2022

Africa Data Response

South Africa Activity Data (Jan.)

January’s hard activity data show that South Africa’s recovery gained ground following the Omicron virus wave. Taken together with more timely figures that point to a continued rebound in activity and mounting inflationary pressures, an interest rate hike at next week’s MPC meeting seems nailed on.

16 March 2022

Africa Economics Weekly

Higher oil prices, SA’s terms of trade and fuel inflation

The latest economic data suggest that South Africa’s recovery has gained ground, and some sectors will benefit from elevated metals prices caused by the war in Ukraine. But at a macro level, a mounting oil import bill is likely to offset these gains. High oil prices will also push up fuel inflation and take the headline rate above target in the coming months. Even so, there are reasons to think that Reserve Bank officials will not raise interest rates as aggressively as investors currently expect.

11 March 2022
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