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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
No matter who wins the race to be Nigeria’s next president, the public debt-to-GDP ratio is likely to remain on an upwards path in the near-term. But victory for an opposition candidate could make the fiscal outlook considerably brighter further down …
15th February 2023
Weakness spreading beyond industry in SA; Nigeria’s surprise rise in inflation December’s hard activity figures out of South Africa point to a mild contraction in GDP in Q4 and indicate that weakness in the economy is spreading beyond industrial sectors. …
Easing price pressures to make way to final rate hike Inflation in South Africa continued to decline, to 6.9% y/y in January, but we think that the Reserve Bank will err on the side of delivering a final 25bp rate hike to (7.50%) at the next policy …
South Africa: SONA or SO-NO? The declaration of a state of disaster in South Africa’s State of the Nation Address (SONA) over the deepening energy crisis has grabbed the headlines. Yet, in the small print, there were signs of a meaningful shift away …
10th February 2023
South Africa’s upcoming State of the Nation Address will undoubtedly focus on addressing the energy crisis. But there’s little that the government can do to ease power cuts in the near-term before measures to improve electricity availability kick in down …
3rd February 2023
In the latest of our Election Watch series ahead of Nigeria’s polls, we dissect the near-term economic challenges facing the next administration. Boosting oil production, overhauling the foreign exchange regime and placing the public finances on a more …
The global supply of platinum group metals is likely to be increasingly strained by electricity shortages in South Africa. This poor supply outlook is a key reason why we forecast the prices of these metals to remain high over the next year or so, even as …
South Africa’s manufacturing PMI remained essentially unchanged, at 53.0, in January, but while the breakdown provided mixed messages, we think that the underlying picture for the manufacturing sector and the broader economy remains very downbeat. …
1st February 2023
While the economic outlook in much of the world has turned less downbeat in recent weeks, the prospects for Sub-Saharan Africa’s two biggest economies have, if anything, got gloomier due to homegrown economic troubles. In South Africa, power cuts – a …
31st January 2023
China under fire for delays to Zambia’s debt deal Delays to Zambia’s debt restructuring threaten to hold up the country’s IMF deal and add to the signs that the Common Framework isn’t fit for purpose. Officials in Zambia had hoped that a sovereign debt …
27th January 2023
The South African Reserve Bank’s (SARB’s) smaller-than-expected 25bp interest rate hike today and large cuts to its growth forecast make clear that its focus is pivoting to concerns about activity rather than inflation. The next meeting will be a close …
26th January 2023
The Central Bank of Nigeria (CBN) raised the benchmark rate by 100bp, to 17.50%, today in a surprisingly aggressive decision. But with incoming data likely to add to evidence of easing price pressures, we are not convinced that this hawkish tilt will …
24th January 2023
Nigeria’s loan-to-bond swap up in the air Plans by the government of Nigeria to swap central bank loans to bonds have hit a sticky patch, making it unclear whether the country can reap the associated economic gains. Parliamentarians in Nigeria have …
20th January 2023
Industrial weakness offsetting retail strength November’s hard activity figures out of South Africa were a mixed bag, but we think that weakness in industrial sectors will increasingly dwarf any strength elsewhere especially as power cuts and softening …
18th January 2023
End of monetary tightening not far away as inflation falls Inflation in South Africa came in softer than expected, at 7.2% y/y, in December, and with core inflation ticking down as well, we think that a slowdown in the tightening cycle is nailed on. We …
Recent data suggest that Nigeria’s economy was struggling even before demonetisation efforts hit activity late last year. And we don’t expect economic news to take a turn for the better any time soon as further disruptions are likely no matter who wins …
17th January 2023
Dip in inflation to turn CBN’s hawks into minority December inflation data out of Nigeria, at 21.3% y/y, came in below expectations, and provided a first sign that inflation passed its peak. Policymakers are likely to latch onto the fall in inflation and …
16th January 2023
At a key policy conference, South Africa’s ruling party officials offered little by way of new ideas to address the country’s mounting economic challenges. And some fresh proposals risk making matters worse. The ruling African National Congress (ANC) …
13th January 2023
In the first instalment of our Election Watch series ahead of the late-February polls in Nigeria, we assess the economic policies proposed by key candidates. The elections offer a chance to depart from unorthodox policymaking under the outgoing …
12th January 2023
Sub-Saharan Africa’s grim year ahead Last year ended with the bang of Ghana’s sovereign default , and 2023 has started with economies bracing for disruptions due to the end of zero-COVID in China and a looming global recession. While these are likely to …
6th January 2023
PMI picks up, but manufacturing sector set for tough 2023 South Africa’s manufacturing PMI picked up for a fourth consecutive month, to 53.1, in December but the backdrop of persistent power cuts, tight policy and a global recession means that we think …
2022 will be a year to forget for most African economies – one marked by a slowdown in growth, tighter external financing conditions and balance sheet strains. This culminated in Ghana opting to default on much of its external debt earlier this week. …
23rd December 2022
The performance of African economies diverged early this year, but the latest data provide clearer signs that growth across the region is now slowing. Economic weakness seems most pronounced in Ghana, where the impact of the country’s sovereign debt …
20th December 2022
Click here to read the full report. Overview – The challenging external backdrop means that growth across Sub-Saharan Africa is likely to slow in 2023, and by much more than most expect. Currencies are likely to weaken and public debt fears will grow, …
19th December 2022
Ramaphosa still in, De Ruyter out, economy down This week, South Africa’s president dodged impeachment and is likely to be re-elected as leader of the ruling ANC party over the weekend, but the country’s economic challenges have only grown. Early this …
16th December 2022
This is part of a series of reports outlining our key macro and market calls for 2023. Click here to view the full series. Our latest EM Outlook can be found here . EMs will experience one of the broadest slowdowns in GDP growth in 2023 since the 1990s. …
15th December 2022
Unabating price pressures to put policymakers in a bind November inflation data out of Nigeria came in stronger than expected, with the headline rate picking up to 21.5% y/y and price pressures increasing in m/m terms as well. Together with our …
Economy lost momentum at the start of Q4 October’s hard activity data out of South Africa showed the economy’s strong performance in Q3 did not last into Q4. Industrial sectors, in particular, faltered. As headwinds mount, we expect a sharp slowdown. …
14th December 2022
Softer inflation will allow SARB to slow tightening Inflation in South Africa eased a bit more than expected, to 7.4% y/y, in November and there were encouraging signs that core price pressures are fading. The figures will provide room for the Reserve …
Still a long road ahead to restoring debt sustainability The news that Ghana has secured a $3bn staff-level agreement with the IMF will go some way to easing the country’s economic crisis, but the government still needs to clear a number of hurdles to put …
13th December 2022
SA’s politics, Eskom, growth and debt conundrum South Africa’s political upheaval took a breather this week but fears about the state electricity company, Eskom, have grown. Problems at Eskom not only pose a threat to economic activity but, if left …
9th December 2022
As the authorities in Ghana take further steps towards a debt restructuring, in this Update we take stock of the latest developments and their economic implications. The twists and turns of Ghana’s unfolding economic crisis as well as policymakers’ …
7th December 2022
