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Ghana: interest rates up, gov’t spending down The Ghanaian authorities took steps this week to shore up the cedi and tackle the poor public finances but, even though a sovereign default is not imminent, officials may eventually have to back down and turn …
25th March 2022
The upside inflation risks created by the war in Ukraine and the solid performance of South Africa’s economy prompted the Reserve Bank to push ahead with its tightening cycle today, raising the repo rate by 25bp to 4.25%. We maintain our view that rates …
24th March 2022
Shifts in commodity prices in response to the war in Ukraine will provide a sizeable boost to current account positions in Angola and (to a lesser extent) Nigeria this year. Elsewhere, however, higher energy import bills will more than offset any increase …
23rd March 2022
Inflation unchanged, but SARB to press ahead with tightening South Africa’s headline inflation rate was unchanged at 5.7% y/y in February but, with the war in Ukraine increasing upside inflation risks and signs that the economic recovery has been robust …
In this Update , we roll out our sovereign debt heat map that provides a snapshot of debt risks across Sub-Saharan Africa. The pandemic has increased debt burdens across the continent and, with elections on the horizon in many places, governments are …
21st March 2022
Nigerian economy feeling the pain from FX policies Evidence is building that Nigeria’s unorthodox exchange rate regime is fuelling inflation and increasingly damaging economic activity. Policymakers at the central bank have been reluctant to let the naira …
18th March 2022
Recovery picking up pace January’s hard activity data show that South Africa’s recovery gained ground following the Omicron virus wave. Taken together with more timely figures that point to a continued rebound in activity and mounting inflationary …
16th March 2022
Inflation ticks up, pressure building on CBN to tighten The small rise in Nigeria’s headline inflation rate to 15.7% y/y last month provides further evidence that draconian foreign exchange policies are causing shortages and fuelling price pressures. …
15th March 2022
High oil prices dashing upside risks to SA activity… The latest economic data suggest that South Africa’s recovery has gained ground, and some sectors will benefit from elevated metals prices caused by the war in Ukraine. But at a macro level, a mounting …
11th March 2022
Economy weathered Omicron breeze in Q4 South Africa posted decent GDP growth of 1.2% q/q in Q4, shrugging off the Omicron virus wave. While elevated commodity prices will support the economy over the coming months, growth is likely to slow considerably in …
8th March 2022
Flies in the ointment for African oil producers’ gains Oil prices have surged this week, but Africa’s main oil exporters – Nigeria and Angola – are unlikely to reap the full benefits due to persistent oil output problems and the mounting costs of fuel …
4th March 2022
Manufacturing recovery gathers speed The rise in South Africa’s manufacturing PMI in February suggests that the rebound in the sector picked up pace. But headwinds facing the industry and the wider economy mean this strength is unlikely to last. Figures …
1st March 2022
Elevated commodity prices on the back of the Russia-Ukraine crisis will almost certainly add to inflationary pressures across Sub-Saharan Africa. High prices for energy, metals and agricultural products that African countries export seem to have shielded …
28th February 2022
The fallout from the Russia-Ukraine conflict for SSA Direct economic and financial ties between Sub-Saharan Africa and the economies of Russia and Ukraine are limited, but African policymakers will have to contend with the indirect repercussions of the …
25th February 2022
Today’s budget showed that South Africa’s public finances are in a better-than-expected shape but the path to stabilise the debt ratio remains narrow. Mounting pressures to provide more fiscal support mean that we think policymakers will increasingly …
23rd February 2022
This week’s Budget in South Africa will probably see the government reaffirm its commitment to fiscal consolidation. But we think that officials will struggle to stay on this path in the next couple of years, leaving the debt-to-GDP ratio on an upwards …
22nd February 2022
South Africa’s upcoming budget speech will probably contain better-than-projected fiscal results, allowing the finance minister to extend temporary spending measures without undermining near-term budget targets. But this will increase the risk of …
18th February 2022
Growth unlikely to remain strong for much longer Nigeria’s GDP growth was unchanged at 4.0% y/y in Q4 as a slightly smaller drag from the oil sector was offset by a weaker performance in the non-oil economy. But we think that growth will drop back over …
17th February 2022
Economy shrugs off Omicron December’s hard activity data show that South Africa’s economy held up well in the face of the Omicron virus wave. GDP probably expanded by around 0.9% q/q in Q4, implying growth of 4.6% over 2021 as a whole. But growing …
16th February 2022
Inflation past its peak South Africa’s headline inflation rate edged down to 5.7% y/y in January, and with soft core inflation and a bumpy economic recovery, the monetary tightening cycle is likely to be more gradual than most expect. Figures released …
Inflation moving sideways Inflation in Nigeria was unchanged at 15.6% y/y in January and the headline rate will probably soften only gradually. At this point, however, policymakers are unlikely to hike interest rates in response. Figures released today …
15th February 2022
SONA: no bonanza, but tilt to more fiscal support The economy was a key theme in Thursday’s State of the Nation Address (SONA) in South Africa as President Cyril Ramaphosa vowed to press ahead with his reform drive but gave some ground to those in his …
11th February 2022
South Africa’s President Cyril Ramaphosa vowed to press ahead with his signature reform drive to boost the economy in Thursday’s State of the Nation Address (SONA), but most initiatives will take time to bear fruit. In the meantime, the president appeared …
Timely activity data suggest that, over Q4 as a whole, Nigeria’s economy came close to a standstill. The weak economic backdrop is likely to prevent the CBN from raising interest rates in the coming months. GDP growth eased in Q3 of last year, to 4.0% …
9th February 2022
Our downbeat view that most commodity prices will fall back by year-end is largely negative for economies across Sub-Saharan Africa, with Zambia and Angola likely to be hardest hit, although some net oil importers are likely to gain from softening oil …
8th February 2022
South Africa’s President Cyril Ramaphosa, facing an intra-party leadership contest in December, is set to use next week’s State of the Nation Address (SONA) as an opportunity to drum up support. From the perspective of fiscal policy, this is likely to …
4th February 2022
Manufacturing sector on the mend from short and shallow Omicron-hit South Africa’s manufacturing PMI rebounded last month from the slump in activity on the back of the Omicron wave, but headwinds facing the sector and the wider economy will keep the …
1st February 2022
Waves of the Omicron variant that spread across the region in December have subsided sharply in recent weeks. In South Africa, cases have fallen by over 85% since their mid-December peak, and the latest outbreaks have receded with similar speed elsewhere …
31st January 2022
Nigeria’s fuel subsidies: Don’t stop me now The announcement this week by the Nigerian authorities to maintain fuel subsidies – instead of ending the scheme as planned – will limit inflation risks, but the budget deficit is set to come in wider than …
28th January 2022
Overview – Sub-Saharan Africa’s economic recovery from the pandemic is likely to remain one of the weakest of any region over 2022-23 and our GDP growth forecasts are generally below the consensus. The latest virus waves already seem to be ebbing, but low …
The South African Reserve Bank pressed ahead with its tightening cycle by raising the repo rate from 3.75% to 4.00% today as policymakers’ concerns about upside inflation risks and the global monetary policy backdrop increased. Overall, though, the …
27th January 2022
The Central Bank of Nigeria (CBN) kept its benchmark rate on hold at 11.50% today as it shrugged off the unexpected rise in inflation in December and maintained its focus on supporting the recovery. We think that the current accommodative policy stance is …
25th January 2022
A raft of recent economic developments have shaken up our near-term views on monetary policy in South Africa, and we now expect a 25bp interest rate hike at next week’s MPC meeting. However, our forecasts for the next 12-18 months are still more dovish …
21st January 2022
Strong November, but headwinds to build in 2022 November’s hard activity data suggest that South Africa’s economy performed strongly in the middle of Q4 and the early evidence is that the latest Omicron-driven virus wave inflicted only minimal economic …
19th January 2022
Inflation rises, putting SARB in tight spot South Africa’s inflation rate rose to a stronger-than-expected 5.9% y/y in December, probably tilting the Reserve Bank more in favour of continuing to tighten monetary policy. But with soft core price pressures …
Surprise rise in inflation unlikely to prompt rate hike The surprise rise in inflation in Nigeria, to 15.6% y/y in December, will more likely than not prove to be a blip. We don’t think that policymakers will rush to raise interest rates in response. …
17th January 2022
SA: ANC leadership electioneering kicking off Leftist factions of South Africa’s ruling ANC are already gearing up to take on President Cyril Ramaphosa in December’s leadership election and this is likely to push fiscal policy in a looser direction, …
14th January 2022
Sub-Saharan Africa will remain a laggard in the global recovery. The weak economic backdrop means that South Africa’s government is unlikely to stick to its austerity plans and the debt ratio will rise more quickly than most anticipate. Debt risks are …
12th January 2022
SA’s Omicron-experience bodes well for SSA Evidence is growing that South Africa’s latest virus outbreak, driven by the Omicron variant, has been brief and not as economically damaging as previous waves. This should bode well for other economies in …
7th January 2022
The recent sharp fall in virus cases in South Africa provides an early encouraging sign that Omicron-driven outbreaks may run their course relatively quickly. In South Africa’s case, the health system has come under much less pressure than it did during …
5th January 2022
African officials keeping virus-fighting gloves off Three weeks after the detection of the Omicron variant in South Africa, the government is showing no signs of changing course from its approach of minimising virus-related restrictions even as COVID-19 …
17th December 2021
Much attention has been devoted to the Omicron-fuelled fourth COVID-19 wave ripping through South Africa but cases have picked up elsewhere in Sub-Saharan Africa as well, with especially sharp rises in Nigeria and Namibia. There are early signs of virus …
16th December 2021
Inflation rises, but SARB likely to hold fire in January South Africa’s headline inflation rate rose to a slightly stronger-than-expected 5.5% y/y in November but, with core price pressures remaining soft and the economy struggling even before the latest …
15th December 2021
South Africa’s experience with Omicron so far offers tentative hope to other economies since it hasn’t pushed up the incidence of very severe illness in the same way that the Delta wave did. The economic impact will depend on how policymakers respond, …
13th December 2021
Virus and vaccine tales from the Omicron hotspot.. South African officials seem to be pushing vaccine take-up to curb the latest Omicron-induced virus outbreak rather than tightening restrictions on activity. With pressure building on the health system, …
10th December 2021
Timely activity figures suggest that Nigeria’s economy lost momentum in early Q4 as oil sector woes continued and the non-oil economy’s recovery slowed. Headwinds have only built since. Nigeria’s GDP growth softened from 5.0% y/y in Q2 to 4.0% y/y in Q3. …
9th December 2021
Recovery on the back foot even before emergence of Omicron South Africa’s hard activity data for October confirm that the economy was struggling even before the emergence of a fourth virus wave, which will probably dampen activity further. In light of …
Economy to remain depressed following Q3 hit South Africa’s GDP contracted by 1.5% q/q in Q3 as violent unrest and a third virus wave hit the economy hard, and more recent data suggest that activity remained depressed even before the latest rise in …
7th December 2021
Lockdown 101: Lessons from South Africa The emergence of the Omicron variant has put South Africa at the centre of the world’s attention, but we know surprisingly little about how policymakers there intend to respond if the variant is as bad as feared. A …
3rd December 2021
Zambia’s new administration has made encouraging noises about restoring macroeconomic stability and addressing the country’s public debt problem. But it will be a tall order to secure a large restructuring and stick to the fiscal consolidation that will …
2nd December 2021
