Oil producers heading into deeper crises

The plunge in global oil prices has raised the risk of much steeper contractions in output in African oil producers, sharper currency falls, sovereign debt restructurings and problems at local banks.
William Jackson Chief Emerging Markets Economist
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Africa Economics Weekly

FX orthodoxy in Nigeria? Strikes in SA, Ethiopia’s conflict

Comments by Nigeria’s vice president endorsing a more market-based exchange rate regime reflect growing concern about the distortionary effects of the current FX system, but there is no evidence that key officials backing the existing currency arrangements are also shifting tack. In South Africa, ongoing industrial action in the steel industry will probably dampen manufacturing output in Q4, in another hit to the recovery in the sector and the wider economy. Finally, escalating tensions in Ethiopia raise the spectre of more severe strains in the balance of payments.

15 October 2021

Africa Data Response

Nigeria Consumer Prices (Sep.)

The drop in the headline inflation rate in Nigeria, to 16.6% y/y in September, will ease pressure on the central bank to raise rates and allow policymakers to focus on supporting the economic recovery.

15 October 2021

Africa Data Response

South Africa Activity Data (Aug.)

South Africa’s hard activity data for August point to a bumpy recovery following a large hit to the economy in July, adding to reasons to think that interest rates are unlikely to be raised imminently.

13 October 2021

More from William Jackson

Latin America Economics Weekly

Peru turmoil, Chile’s lockdown, hawks & doves

Pedro Castillo’s victory in Peru’s presidential election caused local markets to tumble, but if his more moderate post-election comments are borne out in policymaking, asset prices are likely to recover some lost ground. In Chile, while the latest lockdown has caused the near-term outlook to worsen, we retain a positive view on the economy’s growth prospects. The central bank’s forecasts published this week show that it is of a similar opinion (and that rates will rise this year as a result – in line with our projections). Elsewhere, the news that Mexico’s finance minister will take over as central bank governor next year adds weight to our view that Banxico bank will tolerate higher inflation.

11 June 2021

Latin America Data Response

Mexico Industrial Production (Apr.)

The surprise drop in Mexican industrial production in April may partly be payback for a strong March. And early indicators suggest that industrial activity picked up in May. Moreover, with services sectors recovering, we continue to think that the economy will grow by an above-consensus 6.5% this year.

11 June 2021

Emerging Europe Data Response

Turkey Industrial Production & Retail Sales (Apr.)

The m/m falls in Turkish industrial production and retail sales in April are likely to be followed by further weakness in May (when a three-week lockdown was in place). This supports our view that the economy will probably contract in q/q terms over Q2 as a whole. We suspect that the central bank will leave interest rates unchanged when it meets next week, but the softer economic activity figures will add to demands for rate cuts, which seem likely to come in July.

11 June 2021
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