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SA recovery falters, wage talks, Kenya’s soft start to 2022

Recent flooding in a key province and warnings this week that power cuts could reach unprecedented levels are the latest in a long list of blows to South Africa’s economy that have repeatedly stifled any emerging growth momentum. Meanwhile, South African trade unions’ opening offer in public sector wage negotiations will almost certainly be rebuffed, but we expect that the government will ultimately concede some ground. Elsewhere, Kenya’s statistics office confirmed this week that its economy expanded by 7.5% last year but more timely indicators point to weakness so far this year.
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Jason Tuvey Senior 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 Jason Tuvey

Emerging Europe Data Response

Turkey Consumer Prices (Apr.)

Turkey’s headline inflation rate recorded another sharp increase to 70.0% y/y in April and there’s a strong chance that it moves beyond its peak in the early 2000s in the coming months. Despite this inflation backdrop, a widening current account deficit and more aggressive tightening by the Fed, there is no sign that Turkey’s central bank is about to hike interest rates. EM Drop-In (5th May, 10:00 EDT/15:00 BST): Join Shilan Shah for our latest monthly session on the big macro and markets stories in EMs. This month, Shilan and the team will be talking Russian gas, FX weakness and surging food prices. Register now

5 May 2022

Africa Data Response

South Africa Activity Data (Feb.)

South Africa’s hard activity data for February were a stark contrast to the recent upbeat surveys as output dropped back in the mining, manufacturing and retail sectors. Electricity problems, fiscal austerity and now the devastation wreaked by floods in KwaZulu-Natal mean that the recovery will struggle to regain momentum. As a result, the SARB will continue to move slowly with monetary tightening.

14 April 2022

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.

13 April 2022
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