Pandemic not in the rear-view mirror for some time

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 will hold back recoveries and prevent international travellers from returning quickly – a particular problem or countries like Kenya and Namibia.

1 September 2021

Third wave fears grow

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 in countries in the south of the continent; cases have trended down in many of the region’s other large economies (e.g. Nigeria, Ghana and Ethiopia). With vaccine rollouts progressing at a snail’s pace amid low supplies across the region, fresh virus outbreaks will remain a persistent threat to the outlook. The glimmer of hope is that global powers are looking to increase vaccine supplies and, perhaps most importantly, China could be in a position to flood the world with easily-deployable jabs later in the year.

24 June 2021

A Multispeed Recovery

GDP figures released this month showed that the economic fortunes of Africa’s largest economies diverged in Q2. South Africa’s economy rebounded after a brief recession at the turn of the year. While investment spending remained weak, strength elsewhere in the economy pushed headline GDP growth to a fourquarter high. In Nigeria, by contrast, growth disappointed in Q2. The economy did exit recession, but the very weak performance of the non-oil sector held back headline growth. Among Africa’s smaller economies, recent news was more positive. Growth in Ghana surged in Q2. Recent activity data from Angola, Ethiopia, Zambia, and Uganda all pointed to stronger performances in recent months.

27 September 2017
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Frontier recovery still on track

The recovery in frontier economies continued over the first half of this year. GDP growth averaged around 2.0% y/y in Q1, twice the rates seen in mid-2016. It would have been stronger still were it not for weakness in the largest frontier market, Saudi Arabia. Cuts to oil production there as part of an OPEC agreement caused the economy to contract by 0.5% y/y. More timely figures suggest that most economies fared well in the second quarter.

Major economies rebound, policy easing gains pace

The latest data support our view that the recoveries in Sub-Saharan Africa’s big three economies will be stronger than most expect. Activity data in Nigeria, South Africa, and Angola all suggest that growth accelerated in Q2. The turnaround in South Africa – where the economy entered a technical recession in Q1 – was particularly pronounced. Economic news elsewhere in the region was less positive. The economies of Kenya and Rwanda both appear to have weakened in the first half of the year. Meanwhile, decisions by major central banks in the region this month have reinforced our view that monetary policy will be loosened by more than most expect. We were one of the few analysts to correctly predict that the South African Reserve Bank would cut its key policy rate earlier this month. And while the Central Bank of Nigeria left its key rate on hold, the accompanying statement suggests that policymakers will ease monetary conditions later this year.

Recovery in top economies will drive African rebound

We expect that growth in Sub-Saharan Africa will accelerate over the coming years as the three largest economies in the region – South Africa, Nigeria and Angola – recover from recent recessions. Indeed, our GDP forecasts for these countries in 2017 and 2018 all sit above the consensus. Growth in most other African economies is likely to be relatively stable, although a key exception is Kenya where balance sheet vulnerabilities are mounting and we expect that growth will weaken in 2017. Inflation is set to slow in most countries, meaning that the majority of central banks will lower interest rates over the course of 2017-18. In financial markets, we expect that most currencies will weaken, but at a gentler pace than in 2016.

Africa: Zuma, health concerns put politics centre stage

Events over the past month have raised questions about the positions of the presidents of Sub-Saharan Africa’s three largest economies. Nigeria’s President Muhammadu Buhari missed a key speech commemorating the two year anniversary of his own inauguration, prompting concerns that his health is worse than had been previously reported. The 74 year-old has spent much of 2017 in hospital in London. After several denials, the Angolan government eventually admitted that President José Eduardo dos Santos also spent May in Europe for medical reasons. South Africa’s President is in better health; but Jacob Zuma had to face down yet another attempt by disgruntled members of the ruling ANC to remove him from office. The embattled president won a clear victory, but this latest struggle has probably increased tensions within the ruling party. We expect that ailing presidents and a series of political contests – including national elections in Angola and Kenya and a key political conference in South Africa – will delay key policymaking decisions across much of Africa this year.

Africa: latest data confirm very weak growth in late 2016

Data published over the past month provided further evidence that economic growth in the region was very sluggish towards the end of last year. Q3 GDP figures did, admittedly, show that growth picked up a bit in Ghana and Botswana. But growth slowed in Kenya, Uganda, and Rwanda. Figures for Q4 have yet to be released, but the available data suggest that growth in the region’s three largest economies faltered at the end of last year. Our GDP Tracker suggests that South Africa’s economy stagnated in the three months to November, while oil output in Nigeria fell sharply at the end of the year, indicating that its economy continued to contract. Angola releases little timely data, but weak oil output and rumblings of problems in local banks point towards continued subdued activity. Growth is likely to pick up in most African economies in 2017, but we don’t expect a quick recovery.

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