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ANC election struggles, Eskom woes, Nigerian subsidies

Local elections that take place in South Africa on Monday are unlikely to have a direct impact on macroeconomic policymaking, but a poor showing for the ruling ANC could intensify pressure on the government to row back on its austerity plans. One issue that may dominate voters’ thoughts is the growing prevalence of electricity shortages, which the state electricity firm has warned may get worse. Elsewhere, Nigeria appears to be edging towards an overhaul of its fuel subsidy system which would mark a positive step in terms of its external and fiscal positions but, in the near-term, would keep inflation elevated.
Jason Tuvey Senior Emerging Markets Economist
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More from Africa

Africa Data Response

Nigeria Consumer Prices (Apr.)

Inflation in Nigeria jumped to 16.8% y/y last month and the headline rate is likely to rise further as spillovers from the war in Ukraine filter through. Pressure to tighten monetary policy is mounting but we think that MPC members will stick to their guns and keep interest rates on hold over the coming months. EM Drop-In (17th May): Do current EM debt strains point to a repeat of the kinds of crises seen in the 1980s and 1990s? Join our special briefing on EM sovereign debt risk on Tuesday. Register now.

16 May 2022

Africa Economics Weekly

Monetary politics in Nigeria, Ghana’s efforts to curb debt

Nigerian President Buhari’s instruction that current government officials planning to run for the country’s highest office should resign will probably leave the central bank without a governor, but this is unlikely to lead to meaningful change in monetary policy before the elections early next year. Elsewhere, the latest jump in Ghana’s inflation rate will up the pressure on the central bank to raise interest rates further. Yet, officials remain steadfast not to turn to the IMF amid rising investor concerns about the country’s debt position. EM Drop-In (17th May): Do current EM debt strains point to a repeat of the kinds of crises seen in the 1980s and 1990s? Join our special briefing on EM sovereign debt risk on Tuesday. Register now.

13 May 2022

Africa Economics Update

A primer on South Africa’s monetary policy reform

The South African Reserve Bank is set to shake up its monetary policy setup. This Update provides some clarity on what policymakers will do and why, and what it means for monetary and credit conditions. China Drop-In (12th May, 09:00 BST/16:00 SGT): Join our China and Markets economists for a 20-minute discussion about near to long-term economic challenges, from zero-COVID disruptions to US-China decoupling. Register now.

11 May 2022

More from Jason Tuvey

Emerging Europe Data Response

Poland Consumer Prices (Oct.) & Czech GDP (Q3)

The rise in Poland’s headline inflation rate to 6.8% y/y in October opens the door for the central bank to deliver a 25bp at next week’s MPC meeting. Elsewhere, Czechia’s economy performed a little worse than expected in Q3 and a slowdown seems likely this quarter. But that is unlikely to prevent further aggressive monetary tightening.

29 October 2021

Emerging Europe Economics Weekly

Erdogan playing with fire, Russia’s commodity boom

After putting the final nails in the coffin of the Turkish central bank's credibility with last month's surprise interest rate cut, the grave started to be dug this week with the firing of three MPC members. Further large interest rate cuts seem increasingly likely and the lira is heading in only one direction - the risk of a balance of payments crisis akin to that in 2018 will mount. Meanwhile, Russia's balance sheets have improved markedly in recent months amid the surge in global commodity prices, but we think any additional boost from loose fiscal policy will be limited and the factors supporting the ruble are likely to turn into slight headwinds next year.

15 October 2021

Emerging Europe Data Response

Turkey Industrial Production & Retail Sales (Aug.)

Turkey’s industrial sector bounced back in August following a weak start to the quarter and, while retail sales growth slowed, it looks like the economy recorded another robust increase in GDP in Q3.

12 October 2021
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