Sub-Saharan Africa looks better placed to face the current energy shock than the last one in 2022. But the region is still vulnerable to the conflict in the Middle East via the impact on fuel supplies and prices. Ethiopia, South Africa and several East African states are most exposed given their heavy reliance on petroleum imports from the Gulf. Ethiopia has turned to subsidies, although this may raise fiscal risks. In South Africa, consumers will bear the burden. But weak underlying inflation pressures give the Reserve Bank more leeway to cut interest rates than many other EM central banks.
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