Filtered by Subscriptions: Africa Economics Use setting Africa Economics
South Africa pulling the plug from SOEs? The South African government’s decision this week to provide no further debt guarantees to state-owned lender Land Bank underscores the mounting pressure on the public purse. Since defaulting on some of its debt …
22nd January 2021
Policymakers in South Africa looked through the recent virus-related deterioration in economic conditions and kept the policy rate unchanged, at 3.50%, today. As the recovery struggles to gain momentum, monetary conditions will probably stay loose for …
21st January 2021
Inflation edges down, rate cut likely on Thursday The further drop in South Africa’s headline inflation rate, to 3.1% y/y in December, coming alongside the recent tightening of virus containment measures supports our view that the Reserve Bank will cut …
20th January 2021
The rise in oil prices this year is likely to prove insufficient to remove strains in African oil producers’ balance sheets. Currencies in Nigeria and Angola will have to weaken further, and policymakers may turn to more desperate or draconian measures to …
18th January 2021
Propping up Africa’s vaccine supply The announcement that the African Union (AU) has secured a large COVID-19 vaccine order is a positive step towards Africa’s recovery from the coronavirus crisis, but the road remains long and bumpy. Reports suggest that …
15th January 2021
Inflation through the roof, monetary easing off the cards for now The latest jump in Nigerian inflation, to 15.8% y/y in December, on the back of mounting food price pressures will probably take monetary easing off the table in the near term. Figures …
Unhappy new year in South Africa There are no signs of South Africa’s COVID-19 outbreak abating – even though tougher restrictions were imposed last month – which will keep the costs of the pandemic high in the coming months. A second wave, officially …
8th January 2021
Dark clouds gathering over recovery The fall in South Africa’s manufacturing PMI in December points to the recovery grinding to a halt at the end of 2020. The recent tightening of virus containment measures, and the slow and limited access to vaccines …
Recently-announced measures to curb South Africa’s second wave of COVID-19 will probably throw the economic recovery off course, with GDP likely to contract in Q1 if restrictions are extended. We think that the darkening clouds over the recovery will …
4th January 2021
The latest national accounts data from Sub-Saharan Africa tell a story of the good, the bad and the ugly. South Africa’s economy mounted a surprisingly strong recovery in Q3, and a solid rebound in Nigeria’s non-oil sector more than offset weakness in the …
18th December 2020
Trials and tribulations of COVAX Reports this week pointed to the multilateral COVAX facility’s high risk of failure, which would delay many African countries’ access to vaccines and the ensuing economic benefits. South Africa, for its part, missed a …
After the storm of 2020, policymakers in Sub-Saharan Africa will be hoping for calm in 2021. But with vaccine distribution posing a key challenge in the region, economic recoveries may be slower than other parts of the world. And debt relief initiatives …
16th December 2020
Higher and higher Another jump in Nigerian inflation, to 14.9% y/y in November, is likely to be followed by elevated readings in the coming months. But as the headline rate peaks, probably in early 2021, we think that policymakers will resume their …
15th December 2020
Zambia and the IMF: high hopes The confirmation this week that Zambia is seeking an IMF funding program is a positive step, which is likely to improve the chances of a wider debt restructuring deal with external creditors. An IMF deal would lend more …
11th December 2020
Victory for Nana Akufo-Addo in Ghana’s presidential election this week increases the likelihood of fiscal stimulus in the near term, which would support the economic recovery. But the precarious state of the country’s public finances mean that austerity …
South Africa’s hard activity data for October serve as a reality check following a decent rebound in GDP in Q3, suggesting that the pace of the recovery slowed markedly at the start of Q4. A second wave of COVID-19 has increased the possibility of a …
10th December 2020
Inflation edges down and will remain subdued The slight drop in South African inflation, to 3.2% y/y in November, will probably be followed by similarly soft readings in the near term. This, coming alongside a lacklustre economic recovery, means that …
9th December 2020
Headwinds on the horizon following decent Q3 recovery The stronger-than-expected rebound in South Africa’s GDP in Q3 is overshadowed by more recent data pointing to a stuttering recovery. And concerns about a second wave of COVID-19 as well as harsh …
8th December 2020
SA: tighter restrictions but one eye on the economy South African President Cyril Ramaphosa’s speech to the nation last night suggests that, for now at least, the government is continuing to prioritise the economy over battling a second wave of COVID-19. …
4th December 2020
The distribution of effective COVID-19 vaccines is likely to be much slower in Africa than in many other parts of the world and the “vaccine bounce” in domestic economic activity will probably also be more muted. Those countries that will benefit the most …
3rd December 2020
Recovery on ice The sharp fall in South Africa’s manufacturing PMI in November points to the recovery hitting the brakes in the middle of Q4 and, while recent developments regarding vaccines have brightened the outlook, harsh austerity will act as a key …
1st December 2020
Encouraging news about highly effective coronavirus vaccine trials has brightened Sub-Saharan Africa’s economic outlook. However, the region is facing higher barriers compared to many other parts of the world due to a lack of advance purchase agreements …
27th November 2020
Nigerian reforms: blowing hot and cold Mixed signals from recent policy announcements in Nigeria raise doubts about the administration’s commitment to pro-business reforms, most notably in relation to the currency. The announcement by the Central Bank of …
Price pressures pick up The rise in South African inflation, to 3.3% y/y in October, was driven by stronger food inflation and so is unlikely to be a major concern for the Reserve Bank. Subdued core price pressures and a weak economic recovery mean that …
25th November 2020
Policymakers in Nigeria kept their benchmark rate unchanged at 11.50% today, highlighting the dilemma they face due to high inflation and a weak economy. But we think that the central bank will, on balance, opt to provide more monetary stimulus in early …
24th November 2020
Nigeria’s Q3 GDP data showed that ongoing weakness in the oil sector was more than offset by a rebound in the non-oil economy and we expect this two-speed recovery to continue over the coming quarters. Figures released over the weekend showed that …
23rd November 2020
Crawling out of the pandemic era A string of good news from COVID-19 vaccine producers may be followed by further positive updates in the coming weeks, but it is likely to take longer for the “vaccine boost” to reach much of Sub-Saharan Africa compared to …
20th November 2020
Policymakers in South Africa kept their benchmark rate unchanged at 3.50% today, but the close decision underlines lingering concerns about a weak recovery and subdued inflation. Even if the Reserve Bank refrains from further rate cuts over the coming …
19th November 2020
South Africa’s hard activity data for September point to a lacklustre economic recovery in Q3 but this is unlikely to prompt the Reserve Bank to deliver further monetary stimulus at tomorrow’s MPC meeting – we expect the policy rate to be left unchanged …
18th November 2020
There has been much less progress towards debt relief for African economies than many had hoped. And governments’ diverse array of creditors means that the “Common Framework” recently unveiled by the G20 to help debt distressed EMs will struggle to gain …
16th November 2020
Another jump in inflation The rise in Nigerian inflation in October, to 14.2% y/y, will probably prevent policymakers from continuing their easing cycle next week. But we think that further cuts lie in store in early 2021. Figures released today showed …
Warnings against vaccine euphoria The announcement this week of a successful trial of a COVID-19 vaccine is without doubt good news, even as potential access and distribution issues could test policymakers in the region. But the economic gains may not be …
13th November 2020
The easing of containment measures in South Africa in September supported industrial activity, but the recovery remains sluggish. Leading indicators suggest that the pace of recovery waned further in Q4. Activity data published by Stats SA today showed …
12th November 2020
The escalation of political tensions in Ethiopia into outright military conflict threatens to morph into civil war that would push the economy into a deep recession and raise the risk of a sovereign default. Even if this is avoided, Ethiopia’s reputation …
10th November 2020
Political tensions raise economic stakes Frictions between Ethiopia’s federal government and the Tigray region turned into military confrontation this week, which will inflict damage not only on the population but also on the economy. The relationship …
6th November 2020
Pick-up in headline index hides weakness in recovery The rise in South Africa’s manufacturing PMI in October was distorted by a pick-up in supplier delivery times and, if anything, the survey suggests that the recovery continued to lose steam at the start …
2nd November 2020
South Africa: debt hopes hang by a thread South Africa’s Medium Term Budget Statement this week outlined harsh austerity measures, but it wouldn’t take much to knock the plans off course and leave debt on an unsustainable trajectory. We looked in detail …
30th October 2020
Political developments dominating the news in Sub-Saharan Africa over the past month threaten to add to the headwinds facing economic recoveries. Protests in Nigeria that were initially focused on police brutality have morphed into broader discontent with …
29th October 2020
South Africa’s Finance Minister Tito Mboweni today fleshed out harsh austerity plans for the next few fiscal years. But the emphasis on spending cuts, including a three-year public wage freeze, will be politically difficult to push through. The debt …
28th October 2020
Rate cuts unlikely to follow slight drop in inflation The small drop in South African inflation, to 3.0% y/y in September, won’t be sufficient to prompt policymakers to resume their easing cycle. Equally, it reinforces the idea that price pressures are …
South Africa: fears rise of second COVID wave The recent rise in newly recorded COVID-19 cases in South Africa appears to reflect higher testing more than anything else. But it’s a reminder that a renewed outbreak of the virus poses a major downside risk …
23rd October 2020
Overview – Recoveries across Sub-Saharan Africa will be weak, with the region’s three largest economies – Nigeria, South Africa and Angola – set to fare particularly badly. A rebound in tourism sectors has been delayed, low oil prices will weigh on growth …
22nd October 2020
If the recent wave of protests across Nigeria and the curfew in Lagos come to an end in the next day or two, the economic impact should be limited. But if these run on for longer, the recovery in the non-oil sector would be derailed in Q4, and …
21st October 2020
Zambia stares into the default abyss A stand-off between Zambia’s government, China and private creditors is pushing the continent’s second-largest copper producer towards default. Last month, the Zambian government requested a deferral of interest …
16th October 2020
Rise in inflation to push next rate cut into 2021 The increase in Nigerian inflation in September, to 13.7% y/y, will probably be followed by similarly high inflation readings in the coming months. The central bank is likely to keep its benchmark rate on …
15th October 2020
Hard activity data from South Africa released this week point to continued weakness in the economic recovery in August despite the easing of containment measures. Activity data published by Stats SA today showed that retail sales rose by 4.0% m/m in …
14th October 2020
The post-Global Financial Crisis (GFC) experience suggests that the South African Reserve Bank (SARB) is unlikely to raise the repo rate within our near-term forecast horizon (to end-2022). Investors are anticipating that the SARB will hike the policy …
12th October 2020
This week’s 2021 budget presentation by Nigeria’s President Buhari points to challenges in financing the government’s ambitious spending plans, raising the risk that the authorities turn to financial repression policies, including outright deficit …
9th October 2020
Policymakers in Nigeria are taking steps in the right direction with recent market-friendly reforms, from liberalizing petrol prices to moves towards exchange rate unification. But the government hasn’t shed its unorthodox and protectionist tendencies, …
7th October 2020
Debt stand-off in Zambia Zambia’s first steps towards debt restructuring have not got off to a good start, reinforcing our fears that the process will be long and arduous. Last week, the Zambian government announced that it had requested a deferral of …
2nd October 2020
