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The South African Reserve Bank (SARB) hiked interest rates by 50bp, to 8.25%, today on the back of policymakers’ growing concerns about the inflationary impact of persistent power cuts. For now, we think that today’s move marks the end of the tightening …
25th May 2023
The Central Bank of Nigeria’s decision to raise its policy rate by 50bp, to 18.50%, reaffirmed that officials continue to focus on tackling high and rising inflation at the expense of supporting the struggling economy. The increasing likelihood of fuel …
24th May 2023
This webpage has been updated with a table and chart of key data. Growth slows on back of demonetisation Nigeria’s economic growth slowed to just 2.3% y/y in Q1 as the damaging effects of a botched demonetisation process more than offset an easing of …
This webpage has been updated with a table and chart of key data. Rising core inflation to keep policymakers in hawkish mood South Africa’s headline inflation rate dropped back to 6.8% y/y in April but the further strengthening of core inflation will …
SA: threat of AGOA loss no disaster, but unwelcome Allegations that South Africa has supplied arms to Russia has led to calls for the country to lose preferential trade access to the US via the African Growth and Opportunities Act (AGOA). As it happens, …
19th May 2023
Over the past couple of weeks we have held a series of roundtable discussions with clients across Asia and North America on the outlook for EMs. In this Update we provide our thoughts on the recurring questions that we received, including on China’s …
A quick solution to South Africa’s energy crisis is nowhere to be seen. Not only will power cuts remain a drag on economy but there are growing concerns that they are fuelling inflation, threatening the country with a period of stagflation. That presents …
18th May 2023
Skirting technical recession, but power cuts threaten stagflation March’s activity data out of South Africa suggest that the economy is likely to have skirted a technical recession, but the outlook is bleak as the intensification of power cuts weighs on …
17th May 2023
South Africa has traditionally sought to be non-aligned and, in our ‘ mapping decoupling ’ work, we placed it in neither the US nor the China camp. But recent developments suggest that it could be leaning towards the latter. If that’s the case, it might …
16th May 2023
It’s been a week to forget for South Africa, in which fears emerged that the improvement in the public finances is stalling and concerns about (even more) intense loadshedding surfaced. That was topped off by allegations that South Africa supplied weapons …
12th May 2023
Sovereign dollar bond spreads have widened across Sub-Saharan Africa this week and are signalling further debt distress. In much of the region, spreads over US Treasuries are above or near the 1,000bp-mark – a commonly-used threshold for distress. This is …
5th May 2023
The idea of a new BRICS currency to settle trade or hold in reserves instead of the dollar has been doing the rounds recently. This could be modelled on the IMF’s Special Drawing Rights. But getting India on board with China would be difficult. And if the …
4th May 2023
Concerns about Kenya's public finances have intensified with the government recently delaying the payment of public employees' salaries. Policymakers appear willing to honour public debt obligations, but with plenty of pitfalls along the way, officials …
3rd May 2023
Pick-up in headline PMI hiding underlying weakness The rise in South Africa’s manufacturing PMI last month was due to a jump in inventories, while other indicators pointed to further weakness in the sector. The country’s severe energy crisis continued to …
2nd May 2023
The South African Reserve Bank’s Monetary Policy Review (MPR), published this week, made it clear that the central bank is increasingly incorporating fiscal risks into its interest rate projections and decision making process. The poor state of the public …
28th April 2023
Persistent and deepening electricity outages in South Africa are wreaking economic havoc. Almost half of generating capacity was offline this month, triggering severe “loadshedding”. Output in energy-intensive sectors – such as mining and manufacturing – …
27th April 2023
Sticky price pressures strengthening hawks’ hand Recently-released inflation figures out of Sub-Saharan Africa’s two biggest economies are likely to put pressure on policymakers in Nigeria and South Africa to raise interest rates further. March CPI data …
21st April 2023
The economic impact of the Oxford malaria vaccine, which has now been approved by regulators in Ghana and Nigeria, will depend on the pace and breadth of the rollout and how long immunity lasts for. But it could potentially have a large positive impact on …
20th April 2023
South African economy closer to technical recession February’s weak hard activity figures out of South Africa suggest that stronger data from January were a blip and, following a contraction in GDP in Q4, increase the chances that the economy has slipped …
19th April 2023
Latest pick-up in inflation strengthens hawks’ case South Africa’s headline inflation reading for March came in stronger than expected, at 7.1% y/y, and core inflation remains uncomfortably high for policymakers at the Reserve Bank. With persistent …
Glimmers of hope have emerged this week about unlocking the stalemate over the global debt restructuring framework, with encouraging signs for negotiations in Zambia and Ghana. But we fear that the measures considered are more of a workaround that don’t …
14th April 2023
Nigeria’s uphill battle to reverse declining FDI Nigeria’s incoming administration is facing an ever-increasing list of economic challenges, and for many there are no quick solutions are at hand. This is certainly the case for the steady decline in …
6th April 2023
Data suggest that Nigeria’s key oil sector perked up in early-2023, but this was more than offset by weakness in the non-oil economy on the back of bungled demonetisation efforts. And we expect activity to remain subdued over the coming quarters given the …
4th April 2023
Contraction in manufacturing production in Q1 on the cards The fall in South Africa’s manufacturing PMI last month paints a downbeat picture of a sector unable to escape from a severe energy crisis. The figures are consistent with manufacturing output …
3rd April 2023
Overview – Homegrown problems in Sub-Saharan African economies exacerbated by external headwinds are likely to curtail growth this year. We think that regional GDP will expand by 2.3%, which is well below the consensus. Public debt problems will remain …
31st March 2023
Note: Join our 6 th April online briefing all about the risks to EMs from banking turmoil. Register now . Central banks re-upping the pace of tightening Central banks in South Africa, Kenya and Ghana all delivered more aggressive interest rate hikes this …
The South African Reserve Bank (SARB) delivered a more-aggressive-than-expected 50bp interest rate hike, to 7.75%, today as hawks returned to the majority with a bang. But while the probability of another hike in May has increased, we think that easing …
30th March 2023
Recent turmoil in the banking sector may have been a US and European story, but there are potentially important angles for Emerging Market investors. Our latest EM Drop-In explored the economic spill-over risks from the recent panic and the …
28th March 2023
SARB to follow CBN in delivering dovish hike Nigeria’s central bank shrugged off the recent banking sector turmoil and kept its eye firmly focussed on tackling inflation as it hiked interest rates this week and, on balance, we think the South African …
24th March 2023
Financial markets across Sub-Saharan Africa have struggled – and have underperformed their EM peers – since the global banking sector turmoil erupted. Amid broad risk-off sentiment, African sovereign dollar bonds have sold off nearly across the board and …
23rd March 2023
Jump in core inflation seals the deal on a 25bp hike next week The rise in South Africa’s headline inflation rate, to 7.0% y/y, in February may be a sign that the intensification of loadshedding in recent months is fuelling price pressures. So long as …
22nd March 2023
The Central Bank of Nigeria (CBN) raised the benchmark rate by 50bp, to 18.00%, and appeared to lay the groundwork to draw the tightening cycle to a close. The CBN’s decision to raise the benchmark rate by 50bp, to 18.00%, today follows 600bp of …
21st March 2023
While the Credit Suisse rescue might draw a line under that particular institution’s problems, it is clear that confidence in the financial sector overall is still extremely fragile. So regardless of whether more financial institutions run into trouble, …
20th March 2023
Strains in the global banking system have roiled financial markets. (For our full coverage and latest insights, visit our dedicated webpage .) While affected banks may be far away from Sub-Saharan Africa and direct exposures seem limited, the global …
17th March 2023
A key channel through which emerging markets could be affected by the strains in the global banking sector is if lending by foreign banks falls sharply. On this front, EMs’ vulnerabilities have eased since the Global Financial Crisis. But there are still …
16th March 2023
SA economy in less dire straits; Inflation in Nigeria at new 17-year high January’s hard activity figures out of South Africa came in stronger than expected, reducing the chances of a technical recession. But momentum remains extremely weak. Elsewhere, …
15th March 2023
At the time of writing, financial markets appear to be stabilising after the turmoil caused by the collapse of SVB. And it doesn’t look like EMs have suffered large capital outflows or strains in their banking sectors. If this relatively benign scenario …
14th March 2023
SA cabinet reshuffling no magic bullet The new configuration of South Africa’s cabinet, following this week’s reshuffling, is facing high expectations to turn around the power crisis and with it, the economy. But hurdles abound and we doubt that the …
10th March 2023
The South African rand has weakened sharply against the US dollar so far this year, markedly underperforming other emerging market (EM) currencies. We expect domestic and global headwinds to drive a bit more depreciation, to 19.0/$, later this year. But …
9th March 2023
Recovery from Q4 GDP-shocker likely to be muted South Africa’s GDP fell by a sharper-than-expected 1.3% q/q in Q4, and the broad-based weakness in economic activity is unlikely to improve any time soon as severe power cuts and fiscal consolidation …
7th March 2023
Nigeria to take baby steps in pro-market direction The results of Nigeria’s presidential election were quickly challenged by the opposition this week, which is likely to keep investors on tenterhooks. And even once the dust settles, we suspect that …
3rd March 2023
Hopes that Nigeria’s elections would usher in a markedly more business-friendly administration were dashed after the ruling party’s Bola Tinubu was declared president-elect. Economic policy under a Tinubu administration is likely to shift only marginally …
1st March 2023
Electricity woes put further pressure on economy The sharp fall in South Africa’s manufacturing PMI last month provides further signs that the country’s electricity crisis is taking a heavy toll on the economy. And the jump in the prices component …
Sub-Saharan Africa’s two biggest economies, Nigeria and South Africa, are both facing slow-burning debt problems. In Nigeria at least, elections on Saturday offer an opportunity to shift towards greater fiscal discipline – especially if opposition …
24th February 2023
In the final stretch before Nigeria’s elections on Saturday, we answer key questions about the polls and the economic consequences of the vote. All of our election-related research can be found here . What’s at stake? Nigeria is not only Sub-Saharan …
We don’t think that the election in Nigeria on Saturday will lead to a sudden improvement in crude oil production. The oil industry’s challenges in the country are too deep-seated. But the long-awaited Petroleum Industry Bill, passed in 2021, could at …
22nd February 2023
The war in Ukraine. Ageing populations. Rising temperatures. Investors are having to grapple with a formidable range of uncertainties around the long-term outlook for the global economy and markets. Their challenge is compounded by the fracturing of the …
In today’s budget speech, South Africa’s finance minister tried (largely successfully) to pull off the difficult task of sticking to fiscal prudence while partly relieving the struggling state-owned electricity company, Eskom, of its debt burden. But with …
Growth picks up in Q4, but likely to remain weak whoever wins the election Nigeria’s economy recorded a surprisingly large pick-up in GDP growth, to 3.5% y/y, in Q4 but recent disruptions caused by the demonetisation process are likely to have dampened …
What does South Africa’s budget hold in store? South Africa’s mounting economic and political challenges, including the deepening energy crisis, set the stage for the fiscal scales to tip towards providing more support and away from fiscal consolidation …
17th February 2023
