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SA 2025 Budget: fiscal slippage is coming South Africa’s 2025 Budget will be tabled for a third time later this month and, to be approved, we think the ANC and DA will need to agree on some spending cuts, although it probably won’t be enough to avoid some …
2nd May 2025
The prospect of a flood of low-cost Chinese exports to African shores may help those economies suffering from high inflation but it risks undermining the growth of domestic industry. Governments in the likes of Nigeria, with a history of employing …
1st May 2025
SA 2025 budget closer, but fiscal slippage coming South Africa’s 2025 budget took a vital step forward after the Treasury scrapped its proposed VAT hike this week. With the DA also recommitting to the GNU, this will provide some of the certainty that the …
25th April 2025
The larger-than-expected fall in South Africa’s headline inflation rate to 2.7% y/y in March will give the Reserve Bank more confidence that its easing cycle can resume. We expect a 25bp reduction to 7.25% at the next MPC meeting in May followed by a …
23rd April 2025
SARB’s inflation uncertainty may be falling The SARB’s Monetary Policy Review (MPR) published this week set out plenty of upside risks to inflation. But it looks like some of the risks from VAT hikes and tariffs have diminished, which could give the SARB …
17th April 2025
The February activity figures out of South Africa showed that the economy was struggling even before the added headwind from US import tariffs. But while there are downside risks to growth, we still believe a combination of easing loadshedding and …
16th April 2025
Africa Chart Pack (Apr. 2025) …
China rather than US trade big concern for Africa Africa’s direct damage from tariffs imposed by the US should be limited, but the indirect hit will be larger if global growth weakens, and financial spillovers materialise. After US President Trump dialed …
11th April 2025
President Trump’s trade war has created material downside risks for the global economy. Our forecasts assume that tariffs on most countries outside China will stay at 10% and retaliation by other governments will be moderate. In this scenario, global GDP …
10th April 2025
The direct trade impact of US import tariffs on Africa is likely to be limited, but there could be more harmful indirect effects via weaker growth in other key trading partners, lower commodity prices and/or a more challenging external financing …
Some oil producers, such as the UAE and Kuwait, should be able to easily weather a period of low oil prices. But a sustained decline in prices would be a bigger challenge for Saudi Arabia, which would need to tighten fiscal policy, and producers with weak …
9th April 2025
President Trump’s reciprocal tariffs are particularly high on some of the lowest-income EMs, which are also among the most vulnerable to the suspension of US aid flows. That raises the risk of balance of payments strains, and also provides an opening for …
8th April 2025
Direct hit from Trump tariffs to be limited African economies will, for the most part, be relatively unaffected by US President Trump’s tariff announcement this week, at least directly. But it may cause indirect harm through lower commodity prices. And …
4th April 2025
We hosted two online Drop-In sessions on 3 rd April to discuss the fallout from President Trump’s Liberation Day tariff announcement. (See a recording here .) This Update contains answers to some of the questions that we received and links to several more …
3rd April 2025
Africa Chart Pack (Mar. 2025) …
31st March 2025
Trump’s auto tariffs to deal limited blow to SA South Africa finds itself in the firing line from US President Trump’s auto tariffs, but the macro impact will be limited and other developments over the past week have been more positive for the country’s …
28th March 2025
Overview – Economies across Sub-Saharan Africa are amongst the least affected EMs by the protectionist shift that the US is embracing. And growth in the region is set for a modest pick-up on the back of lower inflation and easing monetary policy. But …
In this Update, we answer several key questions about how the announced 25% tariffs on US imports of autos and parts might affect the global economy and the US itself. Mexico, Slovakia and Korea are most exposed with up to 1.6% of GDP at risk. But the …
27th March 2025
It is becoming clear that President Trump’s actions are driven by both his fixation on reducing the US trade deficit and his transactional approach to dealing with other countries. So, even though the Trump administration’s ideas to transform the entire …
25th March 2025
Kenya and the IMF agree to disagree Kenya and the IMF abandoned talks over the ninth review of the country’s existing financing programs this week and, while a new deal is in the offing, public debt concerns are likely to build. It’s been clear for some …
21st March 2025
The South African Reserve Bank left its repo rate on hold at 7.50% today, but a minority of MPC members voted for a cut and we do not think the easing cycle is over. If inflation continues to surprise on the downside as we expect and there is clarity on …
20th March 2025
South Africa’s hard activity data for January show that the retail sector is steaming ahead and driving the recovery. We think the lagging industrial sector will start to catch up on the back of monetary easing and improved electricity and logistical …
19th March 2025
Soft inflation keeps rate cut in play The weaker-than-expected South African inflation figure for February, of 3.2% y/y, keeps the door open for the Reserve Bank to lower the repo rate by 25bp (to 7.25%) at its meeting tomorrow. The outturn was unchanged …
Lingering fiscal risks in South Africa, alongside the challenging global backdrop, prompt us to expect a dim outlook for the country’s bonds, equities and the rand over the rest of this year. The negative reaction in markets to rumours that South Africa’s …
18th March 2025
SA 2025 Budget: will a compromise be reached? South Africa’s budget was finally delivered this week, but without the DA’s support. There are enough reasons to think that a compromise within the GNU will eventually be brokered, but it will still need to …
14th March 2025
South Africa’s 2025 Budget speech was (finally) delivered but it’s not at all clear whether the plans will be approved given the DA’s opposition to the proposed VAT hike. We think there is more horse trading to be done, with Finance Minister Godongwana …
12th March 2025
Kenya’s 2025/26 budget has set out ambitious revenue-raising plans that we think will be tough to achieve and some fiscal slippage is inevitable. The result is that, in the absence of further fiscal consolidation efforts, Kenya’s public debt-to-GDP ratio …
Rand makes gains, but for how long? The rand rallied this week on the news that South Africa’s current account deficit narrowed in 2024, but it remains vulnerable to depreciation given that the terms of trade are set to worsen, and the stability of the …
7th March 2025
The events of the past two weeks have called into question whether the US is severing ties not just with adversaries such as China but also allies, including Canada, Mexico and the European Union. This would radically alter the shape of the fractured …
4th March 2025
End-year rebound sets stage for stronger 2025 The 0.6% q/q rebound in South Africa’s economy in the final quarter of last year came on the back of an upwardly-revised 0.1% q/q contraction in Q3 and suggests that the recovery is back on track. We expect …
No sign yet of SA budget dispute being resolved There’s now less than two weeks until South Africa’s Finance Minister Enoch Godongwana (finally) delivers the 2025 Budget. But the past few days have only further underlined the widening divide between the …
28th February 2025
The threat of lower oil prices and the Angolan government’s apparent reluctance to push through (further) fiscal consolidation measures has raised the risk that it will be the next African sovereign to default on its debt. If that transpires, large debts …
27th February 2025
Softer price pressures pave the way for further rate cuts The smaller-than-expected increase in South Africa’s headline inflation rate, to 3.2% y/y, supports our view that the Reserve Bank can press ahead with its easing cycle over the coming months. The …
26th February 2025
Growth picks up, recovery to continue in 2025 Nigeria recorded a further pick-up in GDP growth to 3.8% y/y in Q4 of last year and, with inflation and interest rates set to fall sharply, we expect the recovery to continue over the coming quarters. The …
25th February 2025
SA Budget: GNU coalition under strain South Africa is still reeling from this week’s surprise last minute Budget postponement and concerns about divisions within the GNU are likely to rise. We set out our initial thoughts to the delay in a Rapid Response …
21st February 2025
Rates on hold, CBN to turn to easing soon The Central Bank of Nigeria confirmed today that its tightening cycle was at an end by leaving the policy rate at 27.50% today, and we think its attention will quickly turn to rate cuts, probably beginning in May …
20th February 2025
The eleventh-hour unprecedented postponement of South Africa’s 2025 Budget due to disagreements within the Government of National Unity on tax policy, suggest that it is domestic rather than foreign policy where the cracks in the coalition lie. The delay …
19th February 2025
South Africa’s hard activity data for December were generally disappointing but it’s still likely that the economy rebounded in Q4 of last year following a surprise contraction in Q3. We expect the recovery to continue this year and have pencilled in …
The decision by the US and Russia to “lay the groundwork” to end the war in Ukraine marks a potentially significant turning point after three years of conflict. Negotiations will take time and the macroeconomic implications will depend on the features of …
18th February 2025
Nigeria’s headline inflation rate came in at 24.5% y/y in January after the national statistics office made substantial methodological changes and, while we do not yet have the full information to predict the exact path for inflation going forward, fading …
SA 2025 Budget: Fiscal trade-offs to get harder In South Africa, the Treasury will face a difficult balance act in recommitting to fiscal while also appearing pro-growth in next week’s 2025 budget presentation. South Africa Finance Minister Enoch …
14th February 2025
Africa Chart Pack (Feb. 2025) …
13th February 2025
President Ramaphosa used his State of the Nation Address (SONA) yesterday to recommit to fiscal discipline and investment-led growth. The rebuke of the US in his speech was noticeable, suggesting Trump’s recent actions could act to push South Africa …
7th February 2025
After last month’s shock postponement, South African Finance Minister Enoch Godongwana is finally expected to present a 2025 national budget on 12th March. But the ANC and DA have been arguing about fiscal plans, and we think Mr Godongwana faces a …
Mozambique’s post-election woes are mounting after another reported delay to one of its key natural gas projects. And this has led to increasing talk that the government may seek to restructure its debt pile. If sovereign default was to occur, the lesson …
6th February 2025
The threat by President Trump to cut funding to South Africa due to the controversial land expropriation bill will (if implemented) have limited direct economic effects. The bigger concern is that the threat will create tensions within the ruling …
3rd February 2025
South Africa’s tough love on SOE’s unlikely to last South Africa’s SOEs have received tough love recently, hurt by a reluctant government trying to keep the public on side and public finances in check. Eventually, we think unpopular decisions will need to …
31st January 2025
The South African Reserve Bank decision to cut its repo rate by 25bp, to 7.50%, was widely expected but Governor Kganyago was more hawkish than anticipated, citing concern about US tariff threats and the prospects of the rand weakening further. On the …
30th January 2025
Africa Chart Pack (Jan. 2025) …
Nigeria becomes BRICS latest partner country We think Nigeria’s recent admittance as the BRICS’s latest “partner” member adds to the evidence that the government is trying to straddle the geopolitical divide between US- and China-led blocs. After being …
24th January 2025
