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Revisions to South Africa’s historic GDP data show that the economy is more than 10% larger than previously estimated. But this doesn’t alter the headwinds facing the economic recovery and, while the government debt-to-GDP ratio may now be lower, …
25th August 2021
South Africa’s “BIG” plans won’t get very far The South African authorities appear to be devoting increased attention to the idea of a permanent basic income grant (“BIG”) but, in practice, such proposals are probably dead on arrival. The government …
20th August 2021
No sign of unrest-related spike in inflation South Africa’s headline inflation rate eased in July, to 4.6% y/y, as fears that recent violent unrest would fuel inflation pressures proved to be overdone. Underlying price pressures remain soft and, against …
18th August 2021
Headline inflation down on softer food price pressures Policymakers will probably take comfort in the latest fall in Nigeria’s headline inflation rate, to 17.4% y/y in July, even as price pressures mount in major price categories outside of food. Interest …
17th August 2021
The victory of Hakainde Hichilema in last week’s Zambian elections will probably nudge the country in the direction of more prudent macroeconomic policies and reforms under an IMF deal. These may bear fruit over a long time horizon, but we think that the …
16th August 2021
Elections key to Zambia’s economic direction This week Zambians voted in tightly contested elections, and while the results have not yet been announced, we think that one way or another, the fiscal leash will probably be tightened. General elections were …
13th August 2021
The improvement in South Africa’s budget position at the start of this fiscal year has probably now been partially reversed and we think that policymakers will find it increasingly difficult to remain on the narrow path to stabilise the debt-to-GDP ratio …
12th August 2021
South Africa: new cabinet, old problems It may take some time for the dust to settle after this week’s cabinet re-shuffle in South Africa, but one key point is that the new finance minister will face a growing challenge of stabilising public debt. …
6th August 2021
Overview – Vaccination campaigns across Sub-Saharan Africa will continue to struggle, leaving the region vulnerable to renewed virus outbreaks. This, combined with tight fiscal policy, a slow return of tourists and falls in commodity prices means that …
5th August 2021
PMI points to heavy blow to manufacturing sector from unrest and lockdown South Africa’s manufacturing PMI tanked in July as activity was hit by violent unrest and tighter virus containment measures. And while activity is likely to rebound this month, …
2nd August 2021
Walking the line: public finances in South Africa Post-unrest relief measures announced by the South African authorities will probably go some way to offset the blow to the economy. The government expects to be able to stick to its fiscal consolidation …
30th July 2021
The highly contagious Delta variant of COVID-19 seems to be dominant now across much of Sub-Saharan Africa and is driving new waves in many of the large economies. South Africa appears to be over the worst of its latest outbreak, although it now has to …
29th July 2021
Policymakers in Nigeria kept their benchmark rate on hold at 11.50% at today’s MPC meeting and, if we’re right in expecting the economic recovery to disappoint, policy settings are likely to remain unchanged for some time. Meanwhile, the announcement on …
27th July 2021
Vaccines and variants in Sub-Saharan Africa A boost to vaccine supplies in Sub-Saharan Africa is likely to breathe some fresh air into struggling vaccine campaigns across the region at a time when third waves are sweeping across key economies. This week …
23rd July 2021
Policymakers in South Africa kept their benchmark rate unchanged at 3.50% today and the dovish tone of the communications supports our view that interest rates won’t rise until the middle of next year. Today’s decision by the South African Reserve Bank …
22nd July 2021
Soft core price inflation, bumpy recovery to stay policymakers’ hands South Africa’s headline inflation rate eased in June, to 4.9% y/y, and with soft underlying price pressures and clouds over the economic recovery, the Reserve Bank will stand pat at …
21st July 2021
There are signs that the worst of the violence and unrest that has gripped South Africa this week may be over. Any hit to economic activity is unlikely to be long-lasting but the risk that the government’s austerity plans are watered down has increased. …
16th July 2021
The disruption to economic activity from the unrest and violence in South Africa, which now appears to be dissipating, will probably prove to be limited, but the impact on the public finances is likely to be more significant. In particular, there is a …
Slow and steady easing of inflation The latest drop in Nigeria’s headline inflation rate, to 17.8% y/y in June, is likely to reassure policymakers that price pressures are softening and that policy tightening is not necessary to curb inflation. We think …
South Africa’s hard activity data for May painted a picture of a bumpy recovery in Q2, as retail sales grew strongly but industrial sectors showed signs of weakness. With tighter virus containment measures and, more recently, violent unrest, the economy …
14th July 2021
There is clearly a lot of uncertainty over how the unrest in South Africa in recent days will develop but there are reasons to think that the impact on economic activity will be towards the milder end of the spectrum. Perhaps a bigger risk is that the …
13th July 2021
South Africa’s austerity plans on a slippery path? South Africa’s government is giving up further ground in wage negotiations with trade unions, raising the threat that the austerity plans unravel. A three-year public sector wage freeze is at the heart of …
9th July 2021
Nigeria’s oil reforms won’t be a gamechanger Nigeria’s long-awaited Petroleum Industry Bill (PIB) is on the verge of making into law, but it probably comes too late to propel a marked turnaround in the country’s oil sector and will not resolve many other …
2nd July 2021
PMI robust in face of third virus wave South Africa’s manufacturing PMI edged down in June but it remained strong given the context of a severe third wave of COVID-19 and we think that the further tightening of restrictions announced on Sunday will only …
1st July 2021
The further tightening of virus containment measures in South Africa for at least the next two weeks is unlikely to inflict severe damage on the economy. But it reinforces our view that the Reserve Bank will be in little rush to follow other EM central …
28th June 2021
Ghana: bumper harvest to support recovery Media reports suggest that Ghana may be heading for its biggest cocoa harvest in at least a decade. High rainfall and better farming practices have, according to the same reports, helped push output to its highest …
25th June 2021
Worries about a third wave of COVID-19 in the region have intensified in the past month and the tightening of lockdown measures in some countries – most notably South Africa – will weigh on recoveries. As things stand, surges in cases appear concentrated …
24th June 2021
Soft core inflation, economic setbacks to keep rates on hold Although South Africa’s headline inflation rate jumped to a multi-year high of 5.2% y/y last month, the weakness of core inflation and the recent tightening of lockdown measures means that the …
23rd June 2021
South Africa: a bumpy second quarter The South African retail sales figures out this week add to the evidence that the economic recovery has been weak and bumpy during the second quarter. Retail sales dropped by 0.8% m/m in April, adding to a weak set of …
18th June 2021
Inflation probably past its peak The second consecutive drop in Nigeria’s headline inflation rate, to 17.9% y/y in May, will probably go some way towards easing policymakers’ recent concerns about high and rising inflation. While we expect inflation to …
15th June 2021
Nigeria’s government has turned to the central bank to plug ever larger budget deficits in recent years and policymakers are unlikely to kick their deficit monetisation habit, particularly if the fiscal position worsens next year (as we expect). This will …
14th June 2021
Vaccinating the world: tides turning? G7 leaders meeting this week are ramping up efforts to provide more vaccines to the developing world, which could give a lift to struggling inoculation campaigns and economic recoveries in Africa. Reports suggest …
11th June 2021
South African hard activity data for April painted a mixed picture about the rebound in the mining and manufacturing sectors. By and large, though, the economy is in for a slow and bumpy recovery. Activity data published by Stats SA today showed that …
10th June 2021
Smaller-than-expected hit from second wave South Africa’s economy weathered a second virus wave relatively well, but with cases rising again and other headwinds hanging over the outlook, the recent strength of the recovery is unlikely to last. As measured …
8th June 2021
SA lockdown level up, recovery outlook (still) down The recent tightening of containment measures to curb South Africa’s third virus wave is unlikely to be as damaging for the economy as earlier rounds of restrictions. Even so, the prospect of further …
4th June 2021
PMI up, but headwinds remain The rise in South Africa’s manufacturing PMI in May points to an improvement in underlying economic conditions in the sector, but we think that the recovery will be held back by key headwinds including another virus surge, …
1st June 2021
Making it official: Nigeria’s devaluation Policymakers at the Central Bank of Nigeria (CBN) appear to have bowed to pressure to devalue the official exchange rate, and finally acknowledged the move. But a unified and fairly valued naira that many are …
28th May 2021
Currencies of the two biggest economies in Africa have had contrasting fortunes recently, with Nigeria’s official naira exchange rate recently devalued but the South African rand soaring on the back of higher metals prices. Nigerian policymakers have …
27th May 2021
Policymakers in Nigeria kept their benchmark rate on hold at 11.50% at today’s MPC meeting, opting to emphasise the fragile nature of the economic recovery over elevated inflation. With price pressures likely to ease, we think that monetary policy …
25th May 2021
The pick-up in Nigeria’s GDP growth in Q1 was driven in large part by the oil sector and rising oil output will support a further acceleration in growth over the coming quarters. But FX restrictions, limited fiscal support and a very slow vaccine rollout …
24th May 2021
Nigeria’s plans external borrowing as naira falls(?) External borrowing plans put forward by Nigeria’s president this week would leave the debt position even more vulnerable to falls in the naira. This week, President Buhari submitted a request to the …
21st May 2021
Sub-Saharan Africa’s already slow vaccination campaigns received another blow with news this week that a key supplier, India’s Serum Institute, is delaying shipments further. African policymakers will probably struggle to fill the vaccine supply gap and, …
Policymakers in South Africa kept their benchmark rate unchanged at 3.50% today, while laying the foundations for normalising monetary policy. We think that rate hikes are some time off as the Reserve Bank’s focus will remain squarely on supporting a weak …
20th May 2021
South Africa’s hard activity data for March showed a strong rebound in industrial sectors while the retail sector struggled. Over Q1 as a whole, GDP probably managed to expand by about 1.5% q/q on an annualised basis but major headwinds will keep economic …
19th May 2021
Inflation jump unlikely to trouble the SARB The jump in South Africa’s headline inflation in April, to 4.4% y/y, was driven by energy price effects but there were signs that broader price pressures are starting to build. But even so, we think that the …
African economies have benefitted from the rally in commodity prices in recent months, but we think that most of the gains from the terms of trade improvements are behind us. In the coming quarters, net commodity exports are likely to worsen in most …
18th May 2021
Surprise drop in inflation to back up MPC’s dovish majority The slight drop in Nigeria’s headline inflation rate, to 18.1% y/y in April, on the back of easing food price pressures will provide some ammunition to the doves on the MPC and means that it is …
17th May 2021
South Africa: rand fortunes to reverse The South African rand has been a star performer amongst major EM currencies so far this year, but we think that it will suffer one of the biggest losses against the US dollar by year-end. So far this year, the rand …
14th May 2021
South African hard activity data for March paint a bright picture of the recovery in the mining and manufacturing sectors. The easing of lockdown measures combined with favourable base effects are probably at play. We suspect the road ahead will be …
13th May 2021
Security problems in Mozambique are putting huge natural gas investment projects at risk, clouding the country’s otherwise bright economic outlook while reigniting default concerns. In the early 2010s, major oil companies discovered natural gas off the …
12th May 2021
