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Sharp rise in PMI suggests economic recovery is on track South Africa’s manufacturing PMI rebounded in August, finally replicating the improvements we have seen in other survey indicators. A backdrop of interest rate cuts and improving supply conditions …
1st October 2024
CBN rate hikes about inflation and credibility The Central Bank of Nigeria’s surprise hike this week highlighted the greater progress that the MPC wants to see on the inflation front and also importantly its steadfast ambition to restore its trust and …
27th September 2024
Africa Chart Pack (Sep. 2024) …
Overview – A combination of falling inflation and looser monetary policy should help growth to accelerate across Sub-Saharan Africa from early next year. But tight fiscal policy will constrain the recovery and our growth forecasts sit below the consensus. …
25th September 2024
Cardoso’s surprise 50bp hike may not be the last The Central Bank of Nigeria surprised many by raising its policy rate by 50bp to 27.25%, at its meeting today, and Governor Cardoso’s hawkishness about the risks emanating from sticky inflation, energy …
24th September 2024
SARB predicts higher growth and lower inflation The South African Reserve Bank (SARB) outlined a “goldilocks” scenario of stronger growth and lower inflation at its MPC meeting this week. The actual decision to cut the benchmark repo rate by 25bp, to …
20th September 2024
The South African Reserve Bank finally joined the EM easing cycle today, lowering its repo rate by 25bp to 8.00%. While the MPC clearly has some lingering concerns about the inflation outlook, we think sluggish growth and at-target inflation will provide …
19th September 2024
SARB cautiously cuts by 25bp The South African Reserve Bank finally joined other EM economies in starting its monetary policy easing cycle, lowering its repo rate by 25bp to 8.00%. While the decision to cut was unanimous, the MPC did consider both holding …
South Africa’s mixed recovery South Africa’s economy is enduring a clear divergence in its economic recovery. Consumer-facing sectors appear to be performing better but industry, particularly mining, continues to struggle. We think interest rate cuts will …
18th September 2024
Drop in inflation sets the stage for rate cut tomorrow The dip in South Africa’s headline inflation rate, to 4.4% y/y, in August and the further decline in core inflation all but seals the deal on the SARB start an easing cycle tomorrow. We have pencilled …
Disinflation continues, CBN in place to cut rates yet Nigeria’s headline inflation rate dipped to 32.2% y/y in August, confirming the disinflation trend is firmly on course as the pass through from previous sharp falls in the naira continues to fade. This …
16th September 2024
SARB set to join the EM rate-cutting party The current make-up of the MPC means that it will be a close call, but we expect the South African Reserve Bank to embark on an easing cycle next week. How quickly rates come down, though, partly depends on …
13th September 2024
The Fed’s upcoming monetary easing cycle will probably provide less of a tailwind to EMs than is widely thought. While it’s likely to give some central banks (such as in the Gulf, Mexico and Indonesia) a green light to lower interest rates, EM rate …
12th September 2024
SA GDP rebounds in Q2, surveys muddy the water Data released this week showed that South Africa’s economy picked up in Q2 and, while August’s manufacturing PMI painted a downbeat picture, other key surveys released this week were more positive. On …
6th September 2024
Attention at the Forum on China-Africa Cooperation that started today in Beijing will be on the extent to which China can stave off competition from the US to strengthen ties with the region. Relations with China are, for the most part, likely to remain …
4th September 2024
Weaker-than-expected rebound strengthens case for rate cuts South Africa’s economy recorded weaker-than-expected growth of 0.4% q/q in Q2 which, coming alongside the easing of inflation pressures, further strengthens the case for an interest rate cut at …
3rd September 2024
PMI plunges but reasons to not be too downbeat The sharp fall in South Africa’s manufacturing PMI in August was disappointing but the survey has been extremely volatile recently and the big picture is that respondents remained optimistic about the …
2nd September 2024
Chinese lending to Africa increases Data out this week showed that Chinese lending to Africa increased for the first time since 2016. With fiscal policy tight, African economies will welcome more financing. But the region would also benefit from efforts …
30th August 2024
The pick-up in Nigerian GDP growth seen in Q2 will probably be followed by a renewed slowdown this quarter. But we think the backdrop of rising oil production, falling inflation and possible interest rate cuts should set the stage for a more sustained …
28th August 2024
Nigeria businesses downbeat, but economy turning A CBN business survey published this week suggested that businesses are still downbeat on the economy, but we think slowing inflation and a more stable naira may soon bring some near-term cheer. The …
23rd August 2024
Africa Chart Pack (Aug '24) …
There’s growing optimism that South Africa’s economy is set for a period of faster growth under the Government of National Unity (GNU). And we think a combination of lower interest rates and higher consumer spending will help to lift demand in the near …
22nd August 2024
Inflation plunge seals the deal on a rate cut in September The larger-than-expected decline in South Africa’s headline inflation rate, to 4.6% y/y, in July strengthens the case for the SARB to start its easing cycle with a 25bp cut to 8.00% at its next …
21st August 2024
The South African Reserve Bank’s (SARB’s) new “supercore” inflation measure adds yet another piece of evidence that price pressures are being brought under control. We think the SARB should now be confident that it can start its interest rate cutting …
20th August 2024
Mpox fears rising on the continent This week, the WHO declared mpox a global public health emergency amidst a surge in cases in parts of Africa. Beyond the human tragedy, there may be disruption of economic activity in the region, with tourism impacted …
16th August 2024
Inflation finally on the way down Nigeria’s headline inflation rate eased to 33.4% in July, the first time it had slowed in 19 months, as the passthrough from previous naira falls has finally started to faded. With inflation having now peaked, we think …
15th August 2024
South African economy looks to have recorded a pick-up in growth in Q2, but the recovery is operating at two speeds with retail sales and manufacturing on the up, while the mining sector remains a weak spot. Nonetheless, with easing electricity shortages …
14th August 2024
Signs of a thaw in frosty relations between India and China don’t point to a fundamental realignment in India’s position in a fracturing global economy. But they highlight a growing theme of some EMs tactically courting investment from China to put …
13th August 2024
Domestic factors outweigh global turmoil Idiosyncratic factors seemed to play a bigger role than the recent global financial market turmoil in driving African markets this week. But while the fall in oil prices may be overdone, African producers should …
9th August 2024
Protests that originated in Kenya have spread to neighbouring Uganda and as far afield as Nigeria. The common theme of a weak economic backdrop, endemic corruption and fiscal fears means the region is ripe for further unrest. Growth is likely to see a …
7th August 2024
25bp cut likely to be followed by more easing The Central Bank of Kenya delivered a 25bp cut to its policy rate, to 12.75%, at its meeting today as it embarked on long-trailed easing cycle and, with inflation set to fall further from here, additional cuts …
6th August 2024
Fears of a US recession have rattled EM equity markets at a time when EM economies themselves are showing more pronounced signs of weakness. Most EM currencies have held up well, suggesting a dovish tilt may come from EM central banks – particularly those …
5th August 2024
We will be holding a Drop-In next Thursday at 15.00 BST discussing financial risk across the EM world. Register for the 20-minute online briefing here . Nigeria turns back to Ways and Means facility Nigeria’s government raised the limit of its Ways and …
2nd August 2024
Strong PMI suggests economy is finally picking up South Africa’s manufacturing PMI jumped in July, suggesting that improving electricity supply conditions and reduced political uncertainty are starting to support activity. While the economy may finally be …
1st August 2024
Africa Chart Pack (Jul. 2024) …
31st July 2024
The fading drag from load-shedding was widely expected to allow a recovery in South Africa’s economy this year, but this hasn’t materialised. We think that weak demand is to blame, itself a symptom of tight fiscal and monetary policy and a challenging …
AGOA: to extend or to not extend? The importance of the African Growth and Opportunities Act (AGOA) has waned over the past decade, which has focussed attention on efforts to improve it as it comes up for renewal in 2025. Even if it is extended (and …
26th July 2024
Inflation edges down providing cover for interest rate cut in September South Africa’s headline inflation rate edged down to 5.1% y/y in June and with core inflation returning to the mid-point of the SARB’s 3-6% target range, we think the SARB will be in …
24th July 2024
Cardoso’s 50bp hike likely the last, but cuts a long time off The Central Bank of Nigeria delivered a 50bp hike to its policy rate, to 26.75%, at its meeting today and, while this probably marks the end of the tightening cycle, Governor Cardoso’s …
23rd July 2024
Nigeria: yet more spending…. Nigeria announced this week that it needs to raise its 2024 budget spending again, which will be funded by a windfall tax on banks. But efforts are needed to permanently boost revenues if Nigeria’s public finances aren’t to be …
19th July 2024
The South African Reserve Bank’s decision to leave its repo rate unchanged at 8.25% was of little surprise but there was increased optimism on the MPC that inflation is moving towards the 4.5% mid-point of the target and that inflation expectations are …
18th July 2024
SARB holds interest rates but cut now likely in September The South African Reserve Bank decision to leave its repo rate unchanged at 8.25% was of little surprise but there was increased optimism that inflation is moving towards the 4.5% mid-point of the …
The policy shift underway in Nigeria has kept economic growth subdued – something that continued in Q2 according to the latest PMI and confidence data. Tight monetary policy will still remain a constraint on the economy. But with inflation soon set to …
South Africa is struggling to emerge from its recent trend of sluggish economic activity, with stronger outturns in the retail sector being offset by weakness in industry. Nonetheless, we think momentum will build over the coming quarters on the back of …
17th July 2024
Inflation at a peak Nigeria’s headline inflation rate edged up to 34.2% y/y in June on the back of the pass-through from previous naira falls. But we think this marks the peak and inflation should start to decline. If right, that’s likely to lend more …
15th July 2024
CBN hints at rate cuts but inflation risks linger Nigeria’s central bank governor this week hinted that rate cuts may soon be on the cards but there are still upside inflation risks that could scupper those plans. Governor Cardoso’s remarks at an event in …
12th July 2024
Recent protests in Kenya have dealt a heavy blow to President Ruto’s fiscal consolidation plans and, with the president dismissing the cabinet yesterday as he tries to cling on to power, it looks increasingly likely that the government will struggle to …
Ruto revisits fiscal plans After being forced to withdraw the 2024/25 Budget, Kenya’s President Ruto outlined new fiscal plans today that will go some way towards easing concerns among investors and the IMF. Protests in Kenya have rumbled on this week. …
5th July 2024
PMI still weak, but at least its improving South Africa’s manufacturing PMI remained weak in June but improving electricity supply conditions and reduced political uncertainty should support a modest pick-up in activity. That said, the economy is in a …
1st July 2024
This page brings together our analysis of how Donald Trump's return to the White House will affect the outlook for emerging economies. Use the Table of Contents on the right to navigate. All of our analysis on the election, including the implications for …
28th June 2024
