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The Nigerian president’s call to exclude all food importers from the official FX market will probably be poorly-enforced and have little effect on inflation. But the government’s ever-expanding influence over the nominally-independent central bank will …
15th August 2019
After picking up a touch this year, we think that economic growth in Tanzania will slow in 2020 and in 2021. President John Magufuli’s increasingly erratic policymaking will deter investment while external conditions will cause the country’s terms of …
June retail sales figures released today added to the evidence that the economy returned to growth in Q2. But the recovery was soft – we estimate around 1.6% q/q saar – and we still think that policymakers at the SARB will cut their key rate by 25bp in …
14th August 2019
We’ve cut our end-year rand forecast from an already below-consensus ZAR15/$ to ZAR16.5/$. While risks are growing, we’re holding to our view that the SARB will cut its policy rate by 25bp in September. While most emerging market currencies have weakened …
12th August 2019
ZAR: Currency weakness homegrown The South African rand had a tough time this week, shedding 2.3% against the US dollar. Indeed, the currency is now weaker than our end-year forecast of ZAR15/USD. But while this has coincided with a generalised fall in EM …
9th August 2019
Despite the weak performance of the manufacturing sector, June activity data strengthened our view that South Africa returned to growth in Q2 after a sharp fall in Q1. Combined with recent currency weakness, a brisk recovery raises the risk that …
8th August 2019
Hopes that President Cyril Ramaphosa can quickly revive South Africa’s economy are fading. The real problems are all structural, so even if he does make bold policy changes – far from guaranteed, given political obstacles – these would take years to take …
7th August 2019
Eskom: Between a rock and a hard place… While Eskom’s problems are often blamed on corruption and poor management, its recently-released annual report underlined the scale of the structural challenges facing the firm. Eskom faces the significant …
2nd August 2019
Bouncing back, but economy still pretty weak South Africa’s PMI rebounded to 52.1 in July, adding to signs that the economy gained pace in the middle of the year. Even so, headline growth over 2019 as a whole will be tepid, and we still expect that …
1st August 2019
News that South Africa’s government agreed to provide another 60bn rand (US$4.2bn) bailout to Eskom between now and 2021 caused the rand to weaken by 2.3% against the US dollar due to fears that this will result in the sovereign losing its last …
31st July 2019
Eskom: Another bailout, still real solution A new cash injection for Eskom has underlined the scale of the firm’s problems and increased the risk of a sovereign rating downgrade in November. The government will grant another ZAR60bn in 2019/20 and 2020/21 …
26th July 2019
Growth in China is slowing, but fears of a big drag on Africa are overdone. While the Asian giant’s demand for some commodities will soften, it will remain a key trade and investment partner. Indeed, in a slower-growing but more consumer-focused China may …
25th July 2019
Inflation remains at target, rate cut likely in September South African inflation remained at the 4.5% mid-point of the target range in June, which strengthens our view that policymakers will follow up this month’s 25bp rate cut with another one in …
24th July 2019
Nigerian policymakers held their key rate at 13.50% today, and indicated that they will rely on unconventional policy tools to boost lending over the coming quarters. These are, however, unlikely to work, and we think that this will prompt another 50bp …
23rd July 2019
South Africa: More evidence of Q2 rebound Retail sales figures out this week strengthened our view that South Africa’s economy returned to growth in Q2. Based on the data released so far, we’ve pencilled in growth of 1.6% q/q saar. (See here .) Interest …
19th July 2019
Policymakers in South Africa will probably follow today’s 25bp cut with another 25bp of loosening at their next meeting in September. We expect that South African inflation will ease in Q3, while cuts from key central banks elsewhere – notably the US Fed …
18th July 2019
Activity data for May suggest that South Africa returned to growth in Q2. We estimate that GDP rose by about 1.0% q/q saar in the three months to May, and that activity strengthened further in June. The economy will receive another boost if, as we expect, …
17th July 2019
New regulations from the central bank will probably do little to encourage lending to the private sector. So long as government bond yields remain elevated, banks will prefer to park their money in treasuries. The Central Bank of Nigeria (CBN) has issued …
16th July 2019
Inflation eases, rate cut on the way Inflation remained above the central bank’s target in June, but the fact that core inflation slowed has strengthened our view that policymakers will cut their key interest rate next week. Figures released today showed …
15th July 2019
South Africa: Steady as she goes at the SARB The re-appointment of South Africa’s respected central bank governor will help to allay fears concerning the independence of the Reserve Bank. Governor Lesetja Kganyago is a fierce defender of the bank’s …
12th July 2019
Overview – Growth in Sub-Saharan Africa weakened in early 2019, but activity should strengthen in the second half of the year and into 2020 as policy across the region loosens. Even so, our forecasts are below consensus for most African economies. We …
11th July 2019
Activity data for May added to the evidence that the economy rebounded following its contraction in Q1. Even so, we think that the Reserve Bank will cut its policy rate from 6.75% to 6.50% next week. Figures released today showed that manufacturing output …
Nigeria: A change of heart on trade? Nigeria’s government finally agreed to join the AfCFTA this week, leaving Eritrea and Togo as the last two holdouts from the pan-African trade pact. While we think that the benefits of the deal have been oversold, it’s …
5th July 2019
Survey in sustained slump South Africa’s manufacturing PMI picked up in June, but it still points to a poor performance in Q2. While the survey sometimes provides misleading readings, its consistent weakness suggests growth was sluggish. Figures released …
1st July 2019
China Trade Expo: Warm words, but few deals likely A high-profile meeting between Chinese and African leaders this weekend is unlikely to result in any significant trade announcements. One key goal of the first China-Africa Economic and Trade Expo is to …
28th June 2019
Recent economic news from Africa has been pretty poor. Figures released this month confirmed that South African GDP contracted in Q1. And while things probably improved more recently, sharp divides within the government suggest that President Cyril …
27th June 2019
Inflation figures released in South Africa and Nigeria this week supported our view that policymakers in both countries will loosen monetary policy later this year. Rates elsewhere are already falling; the Bank of Mozambique cut by 25bp this week. …
21st June 2019
South Africa’s president provided essentially no policy detail in yesterday’s ambitious State of the Nation speech. Indeed, he seems to have walked back his plan of a relatively modest restructuring the state’s failing energy firm. This suggests to us …
Inflation remained at the 4.5% mid-point of central bank’s target range in May, providing the space for policymakers to support the economy by cutting their key interest rate next month. … South Africa CPI …
19th June 2019
Nigerian inflation remained, at 11.4% y/y, above the central bank’s target range in May, but policymakers will probably still cut their key interest rate in July. … Nigeria CPI …
17th June 2019
Despite this week’s mixed messages from Nigerian officials, we doubt that the country’s FX system will be reformed anytime soon. In South Africa, the latest activity data suggest that the economy picked up in early Q2, but we still think that the SARB …
14th June 2019
Mining figures for April released today were softer than expected, but stronger conditions in the rest of the economy suggest that the second quarter started on a brighter note. This means that South Africa could dodge a technical recession. … South …
13th June 2019
Many of South Africa’s state-owned firms face financial and management troubles, but most – like South African Airways – pose little risk to the wider economy. Eskom and Transnet are the only two which really are ‘too big to fail’. Rescuing both firms …
12th June 2019
Manufacturing output jumped to a three-year high of 4.6% y/y in April. This provides the first sign that the economy returned to growth in Q2, thus dodging a technical recession. … South Africa Manufacturing …
11th June 2019
A political dispute over the mandate of South Africa’s Reserve Bank caused the rand to weaken this week. We doubt that the bank’s charter will be changed, but the row highlights intra-ANC divisions that will hobble efforts to reform the economy (which …
7th June 2019
The surprisingly-sharp 3.2% q/q saar fall in output in Q1 has led us to cut our 2019 full-year growth forecast to a below-consensus 0.5%. Given downbeat survey data for Q2, it is possible that the economy fell into another technical recession over the …
4th June 2019
South Africa’s manufacturing PMI dropped back to 45.4 in May, dampening hopes of a recovery after a weak Q1. The fall in the prices sub-component supports our view that the South African Reserve Bank will cut interest rates, perhaps as soon as July. … …
3rd June 2019
Dovish comments from the South African Reserve Bank this week support our view that an interest rate cut is likely to come as soon as July. Elsewhere, the drop in Kenyan inflation in May backed up the Central Bank of Kenya’s earlier decision to look …
31st May 2019
The inclusion of several investor-friendly ministers in South African president Cyril Ramaphosa’s new cabinet has been interpreted as a sign that the government may renew its push for reform. Local financial markets have rallied on the news. But Mr. …
30th May 2019
The latest developments support our non-consensus view that Angola’s economy will contract again in 2019. Taken together with falling inflation, the central bank’s easing cycle has further to run. … Angola: another year of …
28th May 2019
Central banks in South Africa and Nigeria left policy settings unchanged at their meetings this week but the accompanying communications supported our long-held view that interest rates will be cut later this year. In fact, we have brought forward our …
24th May 2019
Today’s MPC statement strengthened our view that policymakers at the SARB will cut rates soon. Indeed, a shift in opinion on the council has led us to move our forecast of a 25bp cut forward to July’s meeting. … South Africa: Rates on hold, but cuts …
23rd May 2019
Inflation in South Africa decreased to 4.4% y/y in April due to weaker core price pressures. We think that the headline rate will continue on a downward trend over the rest of the year. Combined with weak economic growth, we hold the non-consensus view …
22nd May 2019
Nigerian policymakers voted to hold their key rate at 13.50% today, but the governor’s suggests that they will continue to loosen policy later this year. The governor frequently stressed the need for stimulus, and we think that economic growth will remain …
21st May 2019
Nigerian GDP growth slowed to 2.0% y/y in Q1, strengthening our view that the economy will perform worse than most expect over the course of 2019. We think that today’s weak result will encourage policymakers to cut their key interest rate at their …
20th May 2019
Activity data out this week added to the evidence that South Africa’s economy contracted by about 2% in Q1. Figures out next week, by contrast, will probably show that growth accelerated in Nigeria. Unemployment, however, remains elevated in both …
17th May 2019
March retail sales figures released today added to the evidence that South Africa’s economy contracted by about 2.0% in Q1. This strengthens our belief that the next rate move will be a cut. … South Africa: Activity data point to grim result in …
15th May 2019
The latest changes to Kenya’s railway plan have focused attention on the Chinese-funded SGR project. But the country’s real debt problems surround its growing eurobond sales, which will increase with the sale of another US$2.5bn issuance this week. … …
14th May 2019
Zambia’s public debt position has long been untenable, but the situation is now escalating. The country faces the choice between fiscal tightening (possibly as part of an IMF debt deal) or a more acute crisis. … Zambia: Sliding towards a debt …
10th May 2019
The comparatively poor showing by South African President Cyril Ramaphosa’s ANC in Wednesday's election will probably weaken the reformist leader in his on-going struggle with intra-party rivals. Elsewhere, Nigerian President Muhammadu Buhari’s decision …
