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South Africa’s central bank upped the pace of tightening further with a 75bp hike, to 5.50%, as policymakers’ intensifying fears about inflation (and inflation expectations) trumped any concerns about the slow and bumpy economic recovery. The increasingly …
21st July 2022
Policymakers in a bind after another jump in inflation The jump in inflation in South Africa to 7.4% y/y in June keeps a 75bp interest rate hike on the table at the SARB’s meeting tomorrow. But with policymakers clearly concerned about the weakness of the …
20th July 2022
The Central Bank of Nigeria (CBN) followed up May’s 150bp interest rate hike with a 100bp increase in the benchmark rate today, to 14.00%, as worries about inflation continued to mount. We now expect a 50bp hike at the next MPC meeting, although with …
19th July 2022
The latest population projections released by the UN this week reaffirm that demographics will support strong GDP growth in Sub-Saharan Africa in the long run. But similarly robust income convergence is likely to remain a pipe dream. Chart 1: Total …
15th July 2022
Q2 contraction on the cards The disappointing batch of South African activity data for May suggests that the economy is on course for a mild fall in GDP in the second quarter. The hard activity figures released this week by StatsSA made for pretty grim …
14th July 2022
Amidst sky-high oil prices, a stream of downbeat comments from Nigerian government officials on the state of the economy may seem mind-boggling. In this Focus , we outline what’s behind the country’s struggles, their economic implications and whether …
11th July 2022
Political risks take centre stage Resurfacing political risks in some parts of Sub-Saharan Africa are another threat to recoveries that are already facing multiple headwinds, while at the same time raising the pressure on several governments to provide …
8th July 2022
The decision by Ghana’s government to turn to the IMF will help to restore some calm among investors over the country’s poor public finances. But a very large fiscal squeeze is needed to restore debt sustainability and recent protests highlight the …
6th July 2022
Recent inflation figures out of the region and remarks from central bank officials point towards more, and potentially larger, interest rate hikes in most African economies over the coming months. A key exception is South Africa, where the latest …
1st July 2022
Manufacturing sector rebound slowing The drop in South Africa’s manufacturing PMI in June signals that the rebound from the floods that hit activity in April lost steam at the end of Q2. The sector was probably a considerable drag on headline GDP growth …
If past experience is anything to go by, deepening electricity supply cuts in South Africa are likely to deal a heavy blow to activity in energy-intensive sectors such as mining and manufacturing. Even if loadshedding is scaled back in the coming weeks, …
30th June 2022
The hawkish turn by DM central banks over the past month has further soured investor risk appetite, and capital inflows into African economies are likely to have slowed. Countries with large external financing requirements, and heavy debt burdens …
Exposing corruption in South Africa The conclusion of a multi-year inquiry into corruption in South Africa and recent allegations of impropriety involving the president are likely to undermine his standing ahead of key party leadership elections, and also …
24th June 2022
Inflation jumps, now a choice between 50bp and 75bp hike next month 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. …
22nd June 2022
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 …
21st June 2022
Ripple effects of tighter global financing conditions African financial markets are not insulated from the tightening of global external financing conditions, and recent currency weakness and rising sovereign bond yields in the region will only add to …
17th June 2022
The latest data from Nigeria suggest that the economic rebound slowed further at the start of Q2, and we think that the recovery will remain lacklustre over the coming quarters. The weakness of the economy may give monetary policymakers second thoughts …
16th June 2022
Weak recovery to follow hit to SA industry, jump in Nigerian inflation South Africa’s activity data for April showed that flooding in a key province and renewed power cuts dealt a big blow to industrial sectors, while retail sales held up well. GDP …
15th June 2022
Nigeria’s presidential race: an uninspiring choice Nigeria’s two main political parties have selected presidential contenders, setting the scene for a long campaign season ahead of elections in February 2023. Lots can happen until then, but with more …
10th June 2022
Strong Q1 to lift growth in 2022 South Africa posted stronger-than-expected GDP growth of 1.9% q/q in Q1 and, while the economy is unlikely to sustain such a robust performance over the coming quarters, we have revised up our GDP growth forecast for this …
7th June 2022
Unfavourable shifts in commodity prices, the effects of drought and a slow rebound in the tourism sector will hold back Tanzania’s economy over the next couple of years. But while the near-term outlook is weaker than most think, President Hassan’s …
6th June 2022
South Africa’s fuel levy cut: round two The authorities in South Africa once again stepped in to supress the rise in local petrol prices on the back of the war in Ukraine and, while this will contain fuel price pressures in the near-term, the fiscal costs …
1st June 2022
Partial rebound underway in manufacturing sector The rebound in South Africa’s manufacturing PMI last month reversed some of its losses in April, but the recovery in the manufacturing sector is on shaky footings given ongoing power cuts. And price …
African central banks have turned up their hawkish noises over the past month. Policymakers in Nigeria and Kenya delivered their first interest rate hikes following pandemic-era cuts. In South Africa, the Reserve Bank stepped up the pace of its tightening …
31st May 2022
CBN governor: in or out? Reports this week suggesting that Nigeria’s central bank (CBN) governor, Godwin Emefiele, had been sacked have subsequently been denied by officials. Even so, the rumours did no good for the CBN’s independence and, with or without …
27th May 2022
The outsize role of agriculture in Sub-Saharan African economies and the tendency to rely on imported food products makes the region particularly vulnerable to the agricultural shock caused by the war in Ukraine. In addition to the risk of food shortages, …
25th May 2022
The Central Bank of Nigeria (CBN) delivered a surprise 150bp interest rate hike, to 13.00%, today amid mounting inflation and balance of payments concerns. We expect rates to be raised by another 100bp, to 14.00%, in July but further tightening seems …
24th May 2022
Economy will continue to lose steam Nigeria’s GDP growth slowed to 3.1% y/y in Q1 as robust growth in the non-oil sector was more than offset by a slump in the oil sector. Looser fiscal policy ahead of elections in early 2023 will provide some support to …
23rd May 2022
Central bank hawks ascend amid market ruffles Recent investor risk-off sentiment has pushed up sovereign dollar bond yields across Sub-Saharan Africa, fuelling debt risks further. And central banks appear to be taking note, with some policymakers turning …
20th May 2022
Policymakers in South Africa upped the pace of tightening today, raising the repo rate by 50bp to 4.75%, as concerns about inflation (and inflation expectations in particular) have grown. We don’t think that the hawks will have their way for long though …
19th May 2022
Activity struggling even before hit from floods South Africa’s activity data for March were weak and that was even before flooding in KwaZulu-Natal province dealt a fresh blow to the economy. Inflation figures released earlier today may have increased the …
18th May 2022
Rise in core inflation raises risk of 50bp hike tomorrow South Africa’s headline inflation rate remained close to the upper bound of the Reserve Bank’s 3-6% target range in April, at 5.9% y/y, and will stay there over the coming months. Tomorrow’s …
Latest rise in inflation puts pressure on CBN to tighten 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 …
16th May 2022
Monetary politics in Nigeria Presidential guidance requiring the resignation of current government officials running for Nigeria’s highest office will likely leave the central bank without a governor as he is set to contest the presidential ticket, …
13th May 2022
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. What is the Reserve Bank planning? In November 2021, …
11th May 2022
Green shoots in SA recovery repeatedly uprooted 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 …
6th May 2022
Overview – Sub-Saharan Africa’s recovery is likely to remain slow going and our growth forecasts are generally below the consensus. While spillovers from the war in Ukraine will boost a handful of economies – notably Angola and Nigeria – in others, the …
4th May 2022
Manufacturing sector knocked down in early Q2 The plunge in South Africa’s manufacturing PMI in April suggests that there was a large blow to activity from flooding in a key province and renewed power cuts. One consequence of this economic weakness is …
3rd May 2022
South Africa’s ANC: reforms gaining momentum? Momentum appears to be building within South Africa’s ruling ANC party to shift towards a more private sector-led economic model. But given its track record so far, we wouldn’t hold our breath. An ANC draft …
29th April 2022
Fiscal positions across Sub-Saharan Africa have been a persistent source of concern since the onset of the pandemic – and in some cases, even before. And the commodity price moves resulting from the war in Ukraine will be unfavourable for public finances …
28th April 2022
European officials have increasingly looked to Africa to replace gas supplies from Russia. In principle, the continent’s major producers like Nigeria and Angola (and in the medium term, potentially Mozambique and Tanzania) could benefit. But it’s unclear …
22nd April 2022
Inflation near top of target range The rise in inflation in South Africa in March, to 5.9% y/y, will keep the Reserve Bank’s tightening cycle going at the next meeting in May. But the weakness of core inflation supports our view that interest rates will …
20th April 2022
Floods another blow to SA’s growth momentum This week’s floods in South Africa’s KwaZulu-Natal province are the latest in a series of hits to the economic recovery. Violent unrest last July dealt a heavy blow to the economy and October’s steel sector …
14th April 2022
Activity figures paint downbeat picture 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 …
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 …
13th April 2022
Africa putting COVID-19 in the rear view mirror? Governments across Sub-Saharan Africa have scaled back COVID-19 restrictions in recent weeks and, despite low vaccination coverage, it seems the virus will be less disruptive to activity going forward. But …
8th April 2022
Ghana’s economic recovery will remain sluggish over the next couple of years as policy is tightened in a bid to shore up the public finances and tackle high inflation. The risk of an imminent sovereign default appears low but, if fiscal consolidation …
SA officials to give ground on public wages? Public sector wage negotiations will soon kick off in South Africa and there are reasons to think that officials may concede further ground to trade unions. A surging wage bill has been a key driver of the …
1st April 2022
Solid recovery in Q1 will add to SARB’s hawkishness The further rise in South Africa’s manufacturing PMI in March to a record high provides further evidence that the economy has rebounded strongly from the Omicron-driven dip in activity at the end of last …
Spillovers from the war in Ukraine will have a varied impact across Sub-Saharan Africa. Large oil producers such as Nigeria and Angola are benefitting from the surge in global oil prices but, for the rest of the region, it is worsening their terms of …
31st March 2022
