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South Africa’s public debt burden is not too high, but the direction of travel is very worrying. While the structure of the country’s debts and its deep local capital markets make an acute crisis unlikely, the growing debt pile is another factor pushing …
21st November 2019
Inflation slips again Weak inflation figures have increased the risk of another rate cut at tomorrow’s MPC meeting. But with inflation set to pick up over the coming months, we expect that the rate will remain on hold. Figures released this morning showed …
20th November 2019
Inflation picks up again, rate cut now unlikely Food prices pushed up Nigerian inflation in October, suggesting that policymakers will leave their key rate on hold next week. Monetary conditions will probably still be loosened using unconventional means. …
18th November 2019
South Africa: More signs of contraction in Q3 Mining figures released this week showed that the sector exceeded downbeat expectations in September, but that output still fell over Q3 as a whole. Indeed, the available activity data suggests that GDP …
15th November 2019
Downbeat activity figures suggest that South Africa’s economy contracted again in Q3. This adds to the evidence that the risks to our below-consensus growth figures are heavily weighted to the downside. Figures released this morning showed that mining …
14th November 2019
The Angolan currency’s recent fall will push up inflation and increase the debt-to-GDP ratio even further. While we don’t think that default is an imminent risk, the government will have to tighten fiscal policy. Consequently, GDP is likely to contract …
13th November 2019
South Africa: Inflation, growth both weak Figures out this week suggested that South Africa’s economy faltered in Q3 and that both inflation growth will be soft in the last quarter of the year. Manufacturing production figures were even worse than most …
8th November 2019
Car troubles send manufacturing into reverse Manufacturing output fell further than expected in September, adding to the evidence that South Africa’s economy contracted over Q3. And a key business survey pointed to continued weakness in early Q4. Figures …
7th November 2019
South Africa: Moody’s won’t be pleased New debt estimates from South Africa’s Treasury will probably prompt Moody’s to adopt a ‘negative’ outlook on the country’s local currency debt rating later today, paving the way for a downgrade to ‘junk’ status. We …
1st November 2019
More evidence of weakness South Africa’s manufacturing PMI came in at 48.1 in October, which wasn’t as bad as most analysts had feared. But the measure still suggests that the economy has remained weak in recent months. Figures released earlier today …
Policymakers in South Africa and Angola admitted the severity of their countries’ economic problems this month, while their Nigerian peers moved further down the road to autarky. South Africa’s finance minister revised his government’s deficit and debt …
31st October 2019
Today’s ‘mini-budget’ was a painful admission that South Africa clearly faces a slowly-unfolding fiscal crisis. The gloomy tone may be an attempt to push for unpalatable economic reforms. But today’s speech makes a negative outlook from Moody’s – which is …
30th October 2019
South African’s finance minister will try to use tomorrow’s budget speech to put a positive spin on a very worrying situation. In striking a compromise between the need to boost the economy with efforts to contain a widening budget deficit, he is unlikely …
29th October 2019
Investors’ worries about South Africa’s power sector often focus on Eskom’s growing debts. But a recent government report has also underlined the risk that the faltering grid will struggle to meet demand over the coming decades, prompting power shortages …
28th October 2019
Angola: Kwanza dives as BNA removes trading cap The National Bank of Angola’s decision to abandon its currency trading band and allow the kwanza to float freely suggests that policymakers are finally getting serious about FX reforms. But, after several …
25th October 2019
Overview – Growth in Sub-Saharan Africa will probably pick up in 2020, but we think that it will be much slower than most expect. The key reason for our downbeat view is South Africa, where we think that weak investment spending, tight policy, and …
23rd October 2019
Inflation slips again, but will soon pick up South African inflation edged down to 4.1% in September, but we expect that increasing fuel price pressures will cause the headline rate to rise later this year, preventing monetary easing. Figures released …
Nigeria: Abuja doubles down on protectionism The Nigerian government unexpectedly banned all trade (imports and exports) across the country’s land borders on Tuesday. Officials said the closure, which they described as an effort to combat smuggling, would …
18th October 2019
South Africa’s retail sector didn’t perform as badly as the mining or manufacturing sectors in August, but there is still a growing risk the economy contracted over Q3 as a whole. Figures released this morning showed that South African retail sales growth …
16th October 2019
Above-target inflation won’t stop policy loosening Inflation in Nigeria picked up to 11.2% y/y in September, but we still expect that policymakers will cut their key rate in November. If policymakers opt to leave the rate on hold, they will probably try …
15th October 2019
Nigeria’s budget: Timing is everything The draft budget published this week was more notable for its timing than its contents. This is the first time in several years that the document has been published in Q3, raising the possibility that lawmakers may …
11th October 2019
Weak industrial figures for August present the very real risk that South Africa’s economy contracted again in Q3. Even if growth remained positive, the recovery seen in Q2 has clearly faded. Manufacturing production continued to decline in year-on-year …
10th October 2019
Côte d’Ivoire’s upcoming elections in 2020 raise political risks facing the economy. But our core view is that the vote will pass peacefully, and that looser fiscal policy combined with more favourable external conditions will boost growth to 7.5% next …
8th October 2019
Nigeria: CBN lending push will have little effect The Central Bank of Nigeria has increased pressure on commercial banks to extend more loans by announcing that the minimum loan-to-deposit ratio will rise from 60% to 65% in December. In aggregate, banks …
4th October 2019
Kenya’s economy remained weak in Q2, but there are signs that the key agricultural sector has held up pretty well given this year’s drought. With the drag from the sector easing, GDP growth will pick up over the remainder of this year and into 2020, when …
3rd October 2019
More evidence of weakness in Q3 South Africa’s PMI slumped to a decade low of 41.6 in September, adding to the evidence that – despite the rebound in Q2 – the underlying pace of economic growth remains very weak. Figures released earlier today showed that …
1st October 2019
Kenya: CBK hints at looser policy in 2020 As we’d expected, policymakers at the Central Bank of Kenya (CBK) kept their benchmark rate unchanged at 9.00% for the seventh consecutive meeting this week. New language in the accompanying statement, however, …
27th September 2019
Ethiopia’s investment-focused economic model has attracted widespread praise, but has also created dangerous external vulnerabilities. Were domestic instability or EM-wide risk aversion to cause funding to dry up, the country would quickly face a painful …
26th September 2019
Figures released over the past month brought bad news for almost all of Sub-Saharan Africa’s key economies. After a surprisingly-strong rebound in Q2, growth in South Africa seems to have slowed at the start of Q3. And leading indicators in South Africa, …
Nigeria’s latest budget plan has strengthened our view that the fiscal position is unsustainable and that the country will face some kind of debt crisis within five years. Nigeria’s new fiscal framework makes for sobering reading . The document not only …
25th September 2019
South Africa: Economy falters, no help from SARB Policymakers’ decision to leave their key rate on hold at 6.50% this week suggests to us that the South African Reserve Bank is unlikely to loosen policy further. We’d always argued that inflation would …
20th September 2019
Given policymakers’ decision to keep their key rate on hold at 6.50% today, we now think that South African interest rates will remain unchanged over the coming quarters. Policymakers do not seem inclined to take the opportunity to boost the economy, and …
19th September 2019
Activity data for July suggest that South Africa’s recovery lost steam at the start of Q3. We remain comfortable with our below-consensus growth forecast of 0.5% for this year as a whole. Data released today showed that retail sales rose by 2.0% y/y in …
18th September 2019
Inflation still weak, rate cut likely tomorrow South African inflation remained below the target midpoint in August, which we think will allow policymakers to cut their key rate from 6.50% to 6.25% at their meeting tomorrow. Figures released this morning …
Inflation eases again, rate cut on the way Inflation remained above the central bank’s target in August, but the fact that core inflation slowed has strengthened our view that policymakers will cut their key interest rate in November. Figures released …
17th September 2019
Cutting Nigeria’s oil output: an empty promise? The pledge this week by Nigeria’s oil minister to reduce oil production to fully comply with OPEC+ quotas would, if it materialises, reduce GDP growth significantly. There is a renewed push for OPEC members, …
13th September 2019
Despite the slight improvement in the manufacturing sector, the batch of activity figures for July suggests that South Africa’s economic recovery in Q2 faded at the start of Q3. This adds to reasons to think that the Reserve Bank will cut its key policy …
12th September 2019
Uganda’s balance of payments position is looking increasingly unsustainable. The currency is likely to weaken and domestic demand is set to slow. We think that GDP growth will be a lot weaker than most currently expect over the coming years. Uganda’s …
11th September 2019
South Africa, Nigeria stuck in the slow lane Q2 GDP data released this week supported our view that underlying growth in Africa’s two biggest economies remains weak. In Nigeria, surging oil production wasn’t enough to prevent headline growth from slowing …
6th September 2019
South Africa’s economy made a surprisingly strong recovery in Q2, growing by 3.1% q/q saar, but growth remained weak at a year-on-year rate. Given soft demand and low petrol prices, we expect that inflation will remain subdued, opening a brief window for …
3rd September 2019
Disappointing Q2 GDP figures out today underlined the weakness of Nigeria’s economy. This supported our below-consensus view that growth will remain trapped at around 2% in 2019 and 2020. Figures released this morning showed that economic growth in …
After strong July, PMI tumbles South Africa’s manufacturing PMI fell to 45.7 in August, adding to the evidence that – despite the rebound in Q2 – the underlying pace of economic growth remains weak. Figures released earlier today showed that South …
2nd September 2019
Mozambique: Debt deal is only the first step Even if bondholders agree to the government’s bond restructuring deal – as recent signs suggest they will – Mozambique’s debt problems will be far from over For one thing, the deal only covers the US$727mn …
30th August 2019
Governments across the region made a series of economic policy moves this month, with Ethiopian and South African politicians taking steps forward, and Nigerian ones – again – retreating towards protectionism. In Ethiopia, the government issued a license …
29th August 2019
The unexpected release of economic reform proposals by South Africa’s treasury is probably an attempt to push the president to announce a more ambitious plan at October’s budget speech. The plan contains numerous suggestions that would boost growth in the …
Kenya’s drought will probably push inflation above the CBK’s target range in Q4. But bank will likely look through this spike, as it did in 2017. We think the next rate move will be a 50bp cut in Q4 2020. Inflation picked up again in July, rising from …
28th August 2019
South Africa: Inflation opens window for rate cut News that South African inflation slipped to 4.0% y/y in July supported our view that policymakers at the SARB will cut their key rate to 6.25% in September. As we’d expected, falling petrol prices more …
23rd August 2019
Inflation falls below target, rate cut likely in September South African inflation slipped to just 4.0% y/y in July, supporting our view that policymakers will cut their policy rate from 6.50% to 6.25% in September. This is a strongly non-consensus view. …
21st August 2019
The fall in oil prices this month will create both winners and losers in Africa. But the winners’ gains will be small and spread across dozens of countries, whereas pain will be concentrated in a few economies. Lower energy prices will depress inflation, …
20th August 2019
Nigeria: President calls for tighter FX curbs President Muhammadu Buhari directed the CBN to further restrict importers’ access to the official FX market this week, raising fears that higher food prices would add to inflationary pressures. But the failure …
16th August 2019
