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South Africa

South Africa Manufacturing PMI (Jul.)

The decline in South Africa’s manufacturing PMI in July points to a large hit to activity from weaker global demand as well as severe power cuts at home. It will probably take some time before recently announced efforts to improve electricity availability take shape and, in the meantime, the manufacturing sector and the economy are likely to stay weak. EM Drop-In (4th August, 10:00 ET/15:00 BST): Join our monthly online session on the big issues in emerging markets. In this 20-minute briefing, the team will be answering your questions about debt risks amid global tightening, the latest on the inflation outlook and much more. Register now. ​

1 August 2022

SARB slams on the monetary policy brakes

South Africa’s central bank upped the pace of tightening further with a 75bp hike, to 5.50%, as policymakers’ intensifying fears about inflation (and inflation expectations) trumped any concerns about the slow and bumpy economic recovery. The increasingly hawkish tone of the MPC means that we now think that the repo rate will rise to 7.75% by mid-2023 (previously 6.50%).

21 July 2022

South Africa Consumer Prices (Jun.)

The jump in inflation in South Africa to 7.4% y/y in June keeps a 75bp interest rate hike on the table at the SARB’s meeting tomorrow. But with policymakers clearly concerned about the weakness of the economy and core inflation still soft, a 50bp increase (to 5.25%) still seems to be the most likely outcome.

20 July 2022
More Publications

Demographics to lift growth, but convergence still distant

The latest population projections released by the UN this week reaffirm that demographics will support strong GDP growth in Sub-Saharan Africa in the long run. But similarly robust income convergence is likely to remain a pipe dream.

SA Activity Data (May)

The disappointing batch of South African activity data for May suggests that the economy is on course for a mild fall in GDP in the second quarter.

Political risks piling up, rand on the rocks

Resurfacing political risks in some parts of Sub-Saharan Africa are another threat to recoveries that are already facing multiple headwinds, while at the same time raising the pressure on several governments to provide more fiscal support. Otherwise, while the South African rand held up relatively well in the first part of this year, the currency has already weakened by over 2% against the dollar since the start of July and we think that further falls lie in store.

All aboard the monetary tightening train

Recent inflation figures out of the region and remarks from central bank officials point towards more, and potentially larger, interest rate hikes in most African economies over the coming months. A key exception is South Africa, where the latest commentary poured cold water on investor bets on more aggressive monetary tightening. EM Drop-In (Thurs, 7th July): Join our economists for their regular monthly briefing on the hot stories in EMs – and those that aren’t getting the attention they deserve. In this 20-minute session, topics will include the outlook for EM FX markets after the recent sell-offs. Register now.

South Africa Manufacturing PMI (Jun.)

The drop in South Africa’s manufacturing PMI in June signals that the rebound from the floods that hit activity in April lost steam at the end of Q2. The sector was probably a considerable drag on headline GDP growth over Q2 as a whole. And with escalating power outages weighing on activity, we don’t expect a marked upswing in the recovery. EM Drop-In (Thurs, 7th July): Join our economists for their regular monthly briefing on the hot stories in EMs – and those that aren’t getting the attention they deserve. In this 20-minute session, topics will include the outlook for EM FX markets after the recent sell-offs. Register now.

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