South Africa’s lockdown to give way to slow recovery

Even after further easing of South African lockdown measures last week, a quarter of the economy remains closed. And the impact of the lockdown on unemployment and insolvencies will cause long-lasting economic damage that will hold back the recovery. We now expect that GDP will shrink by 11% over the year as a whole.
Virag Forizs Emerging Markets Economist
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Africa Economics Update

Oil woes to hold back recoveries in Angola & Nigeria

Falling oil production has weighed on the Nigerian and Angolan economies, with the latter likely to suffer its sixth consecutive annual decline in GDP this year. While output should rise next year, we doubt that either will be able to meet its OPEC+ quota, preventing faster recoveries from taking hold in 2022.

21 October 2021

Africa Data Response

South Africa Consumer Prices (Sep.)

Although South Africa’s headline inflation rate picked up to 5.0% y/y in September, soft underlying price pressures and a fragile economic recovery mean that policymakers will only normalise monetary policy gradually. By contrast, investors currently appear to expect a relatively aggressive tightening cycle.

20 October 2021

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

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Africa Data Response

South Africa Manufacturing PMI (May)

The rise in South Africa’s manufacturing PMI in May points to an improvement in underlying economic conditions in the sector, but we think that the recovery will  be held back by key headwinds including another virus surge, slow vaccine rollout, power cuts and austerity.

1 June 2021

Africa Economics Weekly

Naira devalued for real, utility deals in Ethiopia & SA

Policymakers in Nigeria appear to have bowed to pressure to devalue the official exchange rate, which will probably improve the public finances and help unlock multilateral financing. That said, a unified and fairly valued naira is unlikely to follow any time soon. Meanwhile, Ethiopia’s ambitious reform agenda seems to be faltering on nearly all fronts. In South Africa, troubled electricity provider Eskom was a source of good news this week for a change, but power cuts are likely to remain a threat to the economic outlook.

28 May 2021

Africa Economics Update

CBN keeps inflation-fighting tools on the shelf

Policymakers in Nigeria kept their benchmark rate on hold at 11.50% at today’s MPC meeting, opting to emphasise the fragile nature of the economic recovery over elevated inflation. With price pressures likely to ease, we think that monetary policy settings will remain unchanged over our forecast horizon.

25 May 2021
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