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The Central Bank of Nigeria (CBN) kept its benchmark rate on hold at 11.50% today as it shrugged off the unexpected rise in inflation in December and maintained its focus on supporting the recovery. We think that the current accommodative policy stance is …
25th January 2022
A raft of recent economic developments have shaken up our near-term views on monetary policy in South Africa, and we now expect a 25bp interest rate hike at next week’s MPC meeting. However, our forecasts for the next 12-18 months are still more dovish …
21st January 2022
Strong November, but headwinds to build in 2022 November’s hard activity data suggest that South Africa’s economy performed strongly in the middle of Q4 and the early evidence is that the latest Omicron-driven virus wave inflicted only minimal economic …
19th January 2022
Inflation rises, putting SARB in tight spot South Africa’s inflation rate rose to a stronger-than-expected 5.9% y/y in December, probably tilting the Reserve Bank more in favour of continuing to tighten monetary policy. But with soft core price pressures …
Surprise rise in inflation unlikely to prompt rate hike The surprise rise in inflation in Nigeria, to 15.6% y/y in December, will more likely than not prove to be a blip. We don’t think that policymakers will rush to raise interest rates in response. …
17th January 2022
SA: ANC leadership electioneering kicking off Leftist factions of South Africa’s ruling ANC are already gearing up to take on President Cyril Ramaphosa in December’s leadership election and this is likely to push fiscal policy in a looser direction, …
14th January 2022
Sub-Saharan Africa will remain a laggard in the global recovery. The weak economic backdrop means that South Africa’s government is unlikely to stick to its austerity plans and the debt ratio will rise more quickly than most anticipate. Debt risks are …
12th January 2022
SA’s Omicron-experience bodes well for SSA Evidence is growing that South Africa’s latest virus outbreak, driven by the Omicron variant, has been brief and not as economically damaging as previous waves. This should bode well for other economies in …
7th January 2022
The recent sharp fall in virus cases in South Africa provides an early encouraging sign that Omicron-driven outbreaks may run their course relatively quickly. In South Africa’s case, the health system has come under much less pressure than it did during …
5th January 2022
African officials keeping virus-fighting gloves off Three weeks after the detection of the Omicron variant in South Africa, the government is showing no signs of changing course from its approach of minimising virus-related restrictions even as COVID-19 …
17th December 2021
Much attention has been devoted to the Omicron-fuelled fourth COVID-19 wave ripping through South Africa but cases have picked up elsewhere in Sub-Saharan Africa as well, with especially sharp rises in Nigeria and Namibia. There are early signs of virus …
16th December 2021
Inflation rises, but SARB likely to hold fire in January South Africa’s headline inflation rate rose to a slightly stronger-than-expected 5.5% y/y in November but, with core price pressures remaining soft and the economy struggling even before the latest …
15th December 2021
South Africa’s experience with Omicron so far offers tentative hope to other economies since it hasn’t pushed up the incidence of very severe illness in the same way that the Delta wave did. The economic impact will depend on how policymakers respond, …
13th December 2021
Virus and vaccine tales from the Omicron hotspot.. South African officials seem to be pushing vaccine take-up to curb the latest Omicron-induced virus outbreak rather than tightening restrictions on activity. With pressure building on the health system, …
10th December 2021
Timely activity figures suggest that Nigeria’s economy lost momentum in early Q4 as oil sector woes continued and the non-oil economy’s recovery slowed. Headwinds have only built since. Nigeria’s GDP growth softened from 5.0% y/y in Q2 to 4.0% y/y in Q3. …
9th December 2021
Recovery on the back foot even before emergence of Omicron South Africa’s hard activity data for October confirm that the economy was struggling even before the emergence of a fourth virus wave, which will probably dampen activity further. In light of …
Economy to remain depressed following Q3 hit South Africa’s GDP contracted by 1.5% q/q in Q3 as violent unrest and a third virus wave hit the economy hard, and more recent data suggest that activity remained depressed even before the latest rise in …
7th December 2021
Lockdown 101: Lessons from South Africa The emergence of the Omicron variant has put South Africa at the centre of the world’s attention, but we know surprisingly little about how policymakers there intend to respond if the variant is as bad as feared. A …
3rd December 2021
Zambia’s new administration has made encouraging noises about restoring macroeconomic stability and addressing the country’s public debt problem. But it will be a tall order to secure a large restructuring and stick to the fiscal consolidation that will …
2nd December 2021
The South African rand has rallied over the past few days after reaching its lowest level against the US dollar in more than a year following last week’s news about the Omicron variant. Even if the new variant doesn’t lead to a major round of renewed …
1st December 2021
Manufacturing rebound threatened by Omicron South Africa’s manufacturing PMI rebounded last month, but the emerging fourth virus wave and the threat from the Omicron variant has clouded the outlook for activity in the sector and the wider economy. Figures …
The emergence of the Omicron strain of COVID-19 , a worrying new variant first detected in southern Africa, has already rattled financial markets. The economic impact on Sub-Saharan Africa and around the world will depend on how transmissible it is, the …
30th November 2021
A concerning new virus variant identified in Southern Africa has already prompted the re-imposition of restrictions on travellers from the region and triggered a flight to safety in global financial markets. A tightening of local containment measures is …
26th November 2021
The Central Bank of Nigeria kept its benchmark rate on hold at 11.50% today, but the statement signalled that monetary policy normalisation is now on the horizon. While we don’t expect interest rates to be raised imminently, we have pencilled in 200bp of …
23rd November 2021
SARB joining in… This week, the South African Reserve Bank (SARB) joined its EM counterparts in tightening monetary policy, but we don’t think that policymakers in South Africa will hike interest rates as aggressively as those in Emerging Europe and Latin …
19th November 2021
The South African Reserve Bank fired the starting gun on monetary policy normalisation with a 25bp hike in the repo rate, to 3.75%, today amidst growing concerns about inflation risks. But the statement lends support to our view that interest rates will …
18th November 2021
Recovery losing steam The drop in Nigeria’s GDP growth to 4.0% y/y in Q3 points to the recovery in activity outside the key oil sector petering out. We think this will continue over the coming quarters, weighing on headline growth even as oil output …
GDP probably fell in Q3 despite activity rebounding following July hit South Africa’s hard activity data for September point to output continuing to rebound in the sectors hardest hit by violent unrest in July. But the economy probably still contracted …
17th November 2021
Stable inflation support case for slow tightening cycle South Africa’s headline inflation rate stayed at 5.0% y/y in October, with underlying price pressures remaining soft. That, combined with the fragile economic recovery, supports our view that the …
Inflation continues to ease The fall in the headline inflation rate in Nigeria to 16.0% y/y in October will bolster the case for policymakers to keep their benchmark interest rate on hold in order to support the economic recovery. Figures released today …
15th November 2021
With the monetary policy normalisation debate heating up recently in South Africa, next week’s MPC meeting is likely to be a very close call. On balance, we think that the first rate hike will not be delivered just yet and the tightening cycle is likely …
12th November 2021
Today’s Medium Term Budget Policy Statement (MTBPS) in South Africa signalled that the government is broadly sticking with its fiscal consolidation plans. But with growing pressures to ramp up social support just one of the many risks facing the public …
11th November 2021
While external risks have subsided across much of Sub-Saharan Africa in recent quarters, pockets of vulnerability remain. External (and, as a result, debt) vulnerabilities look most acute in Ethiopia. Since the height of the pandemic, when external …
9th November 2021
Slipping ANC support to complicate fiscal plans Next week’s Medium Term Budget Policy Statement (MTBPS) in South Africa is likely to provide an early signal that the government is scaling back its fiscal consolidation plans following the ruling ANC …
5th November 2021
The ANC’s poor showing in South Africa’s local elections this week may strengthen the hand of factions within the party that want to push back against fiscal consolidation. This tilts the risks towards the public debt ratio continuing to rise and, despite …
3rd November 2021
Manufacturing rebound hit by strikes and power outages South Africa’s manufacturing PMI dropped back last month, pointing to a further slowdown in the sector’s already weak recovery. Persistent headwinds will probably keep manufacturing activity subdued. …
2nd November 2021
ANC upset may bolster calls for end to austerity Local elections that take place in South Africa on Monday are unlikely to have a direct impact on macroeconomic policymaking, but a poor showing for the ruling ANC could intensify pressure on the government …
29th October 2021
COVID-19 vaccine coverage remains pitifully low across much of Sub-Saharan Africa, with less than 10% of populations having received at least a first dose in most countries. But there are signs that things may be slowly turning a corner. The rate of …
28th October 2021
Overview – Extremely low vaccine coverage continues to cast a dark cloud over recovery prospects in Sub-Saharan Africa and this will be compounded by deteriorations in the terms of trade and tighter fiscal policy. As a result, rebounds in most economies …
27th October 2021
Disquiet about Ghana’s debt growing The sharp rise in Ghana’s sovereign dollar bond yields this month suggests that investors are coming around to our view about the country’s worrying debt trajectory. Ghana’s dollar-denominated sovereign bond yields have …
22nd October 2021
Falling oil production has weighed on the Nigerian and Angolan economies, with the latter likely to suffer its sixth consecutive annual decline in GDP this year. While output should rise next year, we doubt that either will be able to meet its OPEC+ …
21st October 2021
Inflation creeping up, policymakers to start dovish tightening cycle Although South Africa’s headline inflation rate picked up to 5.0% y/y in September, soft underlying price pressures and a fragile economic recovery mean that policymakers will only …
20th October 2021
Nigeria’s VP joining pro-market FX club Recent comments by Nigeria’s vice president endorsing a more market-based exchange rate regime may reflect growing concern about the distortionary effects of the current FX system. But there is no evidence that key …
15th October 2021
Easing food price pressures continue to push down headline inflation The drop in the headline inflation rate in Nigeria, to 16.6% y/y in September, will ease pressure on the central bank to raise rates and allow policymakers to focus on supporting the …
Economy struggling to overcome July hit South Africa’s hard activity data for August point to a bumpy recovery following a large hit to the economy in July, adding to reasons to think that interest rates are unlikely to be raised imminently. Figures …
13th October 2021
SARB readying for rate lift-off The South African Reserve Bank’s (SARB’s) Monetary Policy Review (MPR) published this week put monetary policy normalisation back in the centre of attention, and it now seems that policymakers are unlikely to stand pat for …
8th October 2021
South African Reserve Bank (SARB) Governor Lesetja Kganyago has recently raised the prospect of lowering the inflation target and, in this Update , we answer five key questions on what it would mean. In the near-term, the adoption of a lower target would …
Full disclosure? SSA debt exposure to China Reports suggesting that many developing countries, including some in Africa, have larger external debts to China than officially reported somewhat reinforce concerns about a lack of transparency and, at the very …
1st October 2021
Manufacturing sector rebound fading South Africa’s manufacturing PMI softened last month, pointing to a slowdown in the rebound from the hit to activity in July from tighter virus containment measures and violent unrest. Supply disruptions are also …
The threat of messy outcomes to Sub-Saharan Africa’s debt problems seems to have diminished recently. In Zambia, the new administration vowed to tackle debt problems and press on with restructuring talks under the G20’s Common Framework. And Ethiopia, …
30th September 2021
