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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
Ghana’s government is likely to slip behind on its fiscal consolidation plans in the coming years and the public debt-to-GDP ratio will probably continue to rise. While we think that the authorities will muddle through, concerns about the country’s fiscal …
27th September 2021
SSA: Vaccine woes to persist even with supply boost This week brought the prospect of an improvement in Sub-Saharan Africa’s vaccine supplies, but the region is still likely to struggle to catch up with the rest of the world in the global vaccination …
24th September 2021
Policymakers in South Africa kept their benchmark rate unchanged at 3.50% today and concerns about lasting economic damage from the pandemic and recent unrest appear to be growing. Against a backdrop of a sluggish recovery and weak inflation, we think the …
23rd September 2021
Policymakers to remain dovish despite rise in inflation South Africa’s headline inflation rate picked up to 4.9% y/y in August but the temporary factors behind the rise are unlikely to worry policymakers. Subdued core price pressures and the slow economic …
22nd September 2021
SA: withering commitment to fiscal consolidation Momentum behind proposals for a basic income grant (BIG) in South Africa appear to be building, suggesting that the authorities are leaning towards providing more fiscal support than their harsh austerity …
17th September 2021
Policymakers in Nigeria kept their benchmark rate on hold at 11.50% at today’s MPC meeting and will probably continue to do so over 2021-23. And the central bank’s insistence on maintaining a strong currency using disruptive foreign exchange rules is …
South Africa’s hard activity data for July underscored the severe blow to the retail and manufacturing sectors from violent unrest and tighter virus restrictions. While much of the hit has probably unwound more recently, weak growth momentum increases the …
15th September 2021
Growing evidence of sustained drop in price pressures The drop in the headline inflation rate in Nigeria, to 17.0% y/y in August was, once again, driven by easing food price pressures, although core inflation also eased. This is likely to reassure …
South Africa: a mixed week of economic news Data this week showed that South Africa recorded robust GDP growth in Q2, but there was little time to celebrate as a slump in manufacturing output in July has raised the risk of a contraction over Q3. Data on …
10th September 2021
Unrest and virus restrictions hit economy hard in July South Africa’s manufacturing sector suffered a larger-than-expected fall in output in July and, while more timely data point to a rebound in activity, the weakness in July has increased the chances …
9th September 2021
Ethiopia’s escalating internal conflict has reignited concerns about the country’s public debt position. While debt dynamics may not look that worrisome on the surface, the political situation threatens the country’s otherwise strong economic growth and …
8th September 2021
Economy put in robust performance in Q2, but key headwinds remain South Africa’s economy grew by a better-than-expected 1.2% q/q in Q2 as strong growth in exports made up for weak domestic demand. Tighter virus restrictions and violent unrest weighed on …
7th September 2021
First impressions from Zambia’s new government Zambia’s newly elected president has wasted no time to push to restore macroeconomic stability, and reassure investors. Less than two weeks into the new administration’s term, Zambian government officials are …
3rd September 2021
The economic damage from the latest COVID-19 waves across Sub-Saharan Africa appears to be smaller compared to previous waves, but low vaccination rates mean that officials will have to keep containment measures in place for longer than elsewhere. This …
1st September 2021
Manufacturing sector bouncing back from July slump South Africa’s manufacturing PMI bounced back last month following a sharp drop in activity in July on the back of violent unrest and tighter virus containment measures. But persistent headwinds will …
Politics pushing Ethiopia closer to economic brink An internal political conflict in Ethiopia is escalating with an all-out civil war no longer a remote prospect. Strains in the country’s already fragile balance sheet are growing. In recent weeks tensions …
27th August 2021
The evidence from the latest COVID-19 waves sweeping through Sub-Saharan Africa point to a smaller economic blow compared to previous waves. Of course, there is a considerable degree of divergence, especially between countries imposing harsh restrictions …
Economic rebound not as rosy as it looks The pick-up in Nigeria’s headline GDP growth to 5.0% y/y in Q2 was largely reflective of favourable base effects created by the sharp downturn a year ago. It appears that the underlying pace of growth actually …
26th August 2021
Revisions to South Africa’s historic GDP data show that the economy is more than 10% larger than previously estimated. But this doesn’t alter the headwinds facing the economic recovery and, while the government debt-to-GDP ratio may now be lower, …
25th August 2021
South Africa’s “BIG” plans won’t get very far The South African authorities appear to be devoting increased attention to the idea of a permanent basic income grant (“BIG”) but, in practice, such proposals are probably dead on arrival. The government …
20th August 2021
No sign of unrest-related spike in inflation South Africa’s headline inflation rate eased in July, to 4.6% y/y, as fears that recent violent unrest would fuel inflation pressures proved to be overdone. Underlying price pressures remain soft and, against …
18th August 2021
Headline inflation down on softer food price pressures Policymakers will probably take comfort in the latest fall in Nigeria’s headline inflation rate, to 17.4% y/y in July, even as price pressures mount in major price categories outside of food. Interest …
17th August 2021
The victory of Hakainde Hichilema in last week’s Zambian elections will probably nudge the country in the direction of more prudent macroeconomic policies and reforms under an IMF deal. These may bear fruit over a long time horizon, but we think that the …
16th August 2021
Elections key to Zambia’s economic direction This week Zambians voted in tightly contested elections, and while the results have not yet been announced, we think that one way or another, the fiscal leash will probably be tightened. General elections were …
13th August 2021
The improvement in South Africa’s budget position at the start of this fiscal year has probably now been partially reversed and we think that policymakers will find it increasingly difficult to remain on the narrow path to stabilise the debt-to-GDP ratio …
12th August 2021
South Africa: new cabinet, old problems It may take some time for the dust to settle after this week’s cabinet re-shuffle in South Africa, but one key point is that the new finance minister will face a growing challenge of stabilising public debt. …
6th August 2021
Overview – Vaccination campaigns across Sub-Saharan Africa will continue to struggle, leaving the region vulnerable to renewed virus outbreaks. This, combined with tight fiscal policy, a slow return of tourists and falls in commodity prices means that …
5th August 2021
PMI points to heavy blow to manufacturing sector from unrest and lockdown South Africa’s manufacturing PMI tanked in July as activity was hit by violent unrest and tighter virus containment measures. And while activity is likely to rebound this month, …
2nd August 2021
Walking the line: public finances in South Africa Post-unrest relief measures announced by the South African authorities will probably go some way to offset the blow to the economy. The government expects to be able to stick to its fiscal consolidation …
30th July 2021
The highly contagious Delta variant of COVID-19 seems to be dominant now across much of Sub-Saharan Africa and is driving new waves in many of the large economies. South Africa appears to be over the worst of its latest outbreak, although it now has to …
29th July 2021
Policymakers in Nigeria kept their benchmark rate on hold at 11.50% at today’s MPC meeting and, if we’re right in expecting the economic recovery to disappoint, policy settings are likely to remain unchanged for some time. Meanwhile, the announcement on …
27th July 2021
Vaccines and variants in Sub-Saharan Africa A boost to vaccine supplies in Sub-Saharan Africa is likely to breathe some fresh air into struggling vaccine campaigns across the region at a time when third waves are sweeping across key economies. This week …
23rd July 2021
Policymakers in South Africa kept their benchmark rate unchanged at 3.50% today and the dovish tone of the communications supports our view that interest rates won’t rise until the middle of next year. Today’s decision by the South African Reserve Bank …
22nd July 2021
Soft core price inflation, bumpy recovery to stay policymakers’ hands South Africa’s headline inflation rate eased in June, to 4.9% y/y, and with soft underlying price pressures and clouds over the economic recovery, the Reserve Bank will stand pat at …
21st July 2021
There are signs that the worst of the violence and unrest that has gripped South Africa this week may be over. Any hit to economic activity is unlikely to be long-lasting but the risk that the government’s austerity plans are watered down has increased. …
16th July 2021
The disruption to economic activity from the unrest and violence in South Africa, which now appears to be dissipating, will probably prove to be limited, but the impact on the public finances is likely to be more significant. In particular, there is a …
Slow and steady easing of inflation The latest drop in Nigeria’s headline inflation rate, to 17.8% y/y in June, is likely to reassure policymakers that price pressures are softening and that policy tightening is not necessary to curb inflation. We think …
South Africa’s hard activity data for May painted a picture of a bumpy recovery in Q2, as retail sales grew strongly but industrial sectors showed signs of weakness. With tighter virus containment measures and, more recently, violent unrest, the economy …
14th July 2021
There is clearly a lot of uncertainty over how the unrest in South Africa in recent days will develop but there are reasons to think that the impact on economic activity will be towards the milder end of the spectrum. Perhaps a bigger risk is that the …
13th July 2021
South Africa’s austerity plans on a slippery path? South Africa’s government is giving up further ground in wage negotiations with trade unions, raising the threat that the austerity plans unravel. A three-year public sector wage freeze is at the heart of …
9th July 2021
Nigeria’s oil reforms won’t be a gamechanger Nigeria’s long-awaited Petroleum Industry Bill (PIB) is on the verge of making into law, but it probably comes too late to propel a marked turnaround in the country’s oil sector and will not resolve many other …
2nd July 2021
PMI robust in face of third virus wave South Africa’s manufacturing PMI edged down in June but it remained strong given the context of a severe third wave of COVID-19 and we think that the further tightening of restrictions announced on Sunday will only …
1st July 2021
The further tightening of virus containment measures in South Africa for at least the next two weeks is unlikely to inflict severe damage on the economy. But it reinforces our view that the Reserve Bank will be in little rush to follow other EM central …
28th June 2021
Ghana: bumper harvest to support recovery Media reports suggest that Ghana may be heading for its biggest cocoa harvest in at least a decade. High rainfall and better farming practices have, according to the same reports, helped push output to its highest …
25th June 2021
Worries about a third wave of COVID-19 in the region have intensified in the past month and the tightening of lockdown measures in some countries – most notably South Africa – will weigh on recoveries. As things stand, surges in cases appear concentrated …
24th June 2021
