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Inflation in South Africa is now running at extremely low rates by historic standards. While we think it will edge up from here, the extent of spare capacity in the economy and tight fiscal stance mean inflation will remain lower than consensus …
13th December 2024
Softer-than-expected inflation points to further SARB cuts in 2025 The smaller-than-expected rise in South Africa’s headline inflation rate, to 2.9% y/y, in November, coupled with the surprise contraction in GDP in Q3, means that the monetary policy …
11th December 2024
South Africa GDP miss to be followed by rebound The 0.3% q/q fall in South Africa’s GDP in Q3 was disappointing, but it was largely driven by a slump in agriculture that should unwind. Along with low inflation and continued monetary easing, we expect the …
6th December 2024
The main presidential candidates and their parties in Ghana’s upcoming election appear to be committed to restoring fiscal discipline and getting inflation under control. That said, the opposition NDC, which currently appears on course to take power, is …
3rd December 2024
Surprise contraction, but things not so bad under the hood South Africa’s economy recorded a surprise contraction of 0.3% q/q in Q3, but that was largely due to a steep decline in agricultural output. The rest of the economy held up much better and we …
CBN makes case inflation close to peaking Central Bank of Nigeria Governor Yemi Cardoso set out the case at this week’s MPC meeting for inflation to slow down, suggesting that officials are eyeing the end of the tightening cycle. The CBN’s …
29th November 2024
We held an online session on US import tariffs on 26th November. (See a recording here ). In this Update we answer the questions we were most asked. What are Trump’s motives for threatening tariffs and will he follow through? Trump has spoken about using …
Africa Chart Pack (Nov. 2024) …
27th November 2024
25bp hike probably the last of this cycle The Central Bank of Nigeria opted for a smaller-than-expected hike in its policy rate of 25bp to 27.50%, at its meeting today and, with Governor Cardoso sounding optimistic that the effects of petrol price hikes …
26th November 2024
We discussed the global impact of higher tariffs in a Drop-In on Tuesday, 26th November. Click here to watch the 20-minute online briefing. In this Focus, we construct a framework to explore the channels through which an import tariff works, which we use …
25th November 2024
Growth picks up, but outlook remains challenging Nigeria recorded a surprise pick-up in GDP growth to 3.5% y/y in Q3 as stronger growth in the non-oil economy more than offset a slowdown in the oil sector. We expect growth to remain soft until the …
SARB: lower CPI target poses upside risk to rates The SARB seemed optimistic when cutting its repo rate by 25bp to 7.75%, this week and, while we expect further easing, the growing likelihood that the inflation target will be lowered in the coming months …
22nd November 2024
The South African Reserve Bank’s decision to lower its repo rate by 25bp to 7.75% was not a surprise and Governor Kganyago sounded more optimistic that inflation is under control. Lingering concerns about the vulnerability of the rand and the growing …
21st November 2024
US President-elect Trump’s protectionist rhetoric may mean that African sovereigns are contemplating the loss of preferential trade access to the US via the AGOA scheme. We think the overall impact from such a move would be limited, but specific sectors …
South Africa’s activity data for September points to a subdued end to Q3, but we think this softer patch will be short-lived as low inflation and the SARB’s easing cycle provide some support to demand. That said, tight fiscal policy will prevent the …
20th November 2024
Sharp drop in inflation sets the stage for 25bp cut tomorrow The drop in South Africa’s headline inflation, to 2.8% y/y, in October, will make it harder for the SARB to strike a hawkish tone regarding inflation pressures at its monetary policy committee …
US President-elect Donald Trump’s plans to curb immigration and undertake a mass deportation of undocumented migrants could boost labour supply in countries that are the source of migrants. But there could be social and fiscal costs, as well as lower …
18th November 2024
Rand hit by Trump trade, falling commodity prices The recent weakness of the South African rand is a symptom of the “Trump trade”, but sharp falls in some of South Africa key commodity exports also appear to have played a role. We expect the currency to …
15th November 2024
Inflation jump to prompt 100bp hike from CBN this month Nigeria’s headline inflation picked up for a second consecutive month, to 33.9% y/y in October, largely due to the impact of rising petrol prices. The CBN now appears to have little choice but …
South Africa’s mining sector has been a struggling part of the economy for some time and, while easing logistical and electricity constraints will provide some relief, weaker commodity prices in the coming years will hold back any recovery. The sector …
12th November 2024
Donald Trump’s victory in the US election has, so far, been met with a muted response in African financial markets. The South African rand, for example, has held broadly steady while regional dollar bond yields have recorded modest moves. That said, a …
8th November 2024
South Africa reembraces fiscal discipline The biggest event this week was South Africa’s Medium-Term Budget Policy Statement (MTBPS) on Wednesday, which was pitched as pro-growth, but the numbers underline that the Treasury sees little room to loosen the …
1st November 2024
Africa Chart Pack (Oct. 2024) …
31st October 2024
The South African Medium-Term Budget Policy Statement (MTBPS) was presented as a “pro-growth” statement, but the numbers underscore that the government has no room to loosen the fiscal stance. Continued fiscal austerity will help to sustain investor …
30th October 2024
The outbreak of unrest in Mozambique after contested elections is unlikely to have a large impact on growth in the near term. But any attempts by the government to loosen fiscal policy to appease protestors or, further out, disruptions to large gas …
Dead Nigeria Shell oil deal sign of local firm worries This week Nigeria rejected Shell’s sale of its onshore oil business, the latest multinational attempt to divest from Nigeria. Lower foreign investment makes us less hopeful on Nigeria’s oil production …
25th October 2024
A victory for Donald Trump in the US election would probably result in higher US Treasury yields and a stronger dollar. That’s an environment in which central banks in EMs with strained balance sheets (notably Turkey) could hike rates and others that are …
24th October 2024
Sharp drop sets the stage for 25bp rate cut in November The drop in South Africa’s headline inflation rate, to 3.8% y/y, in September, means that the SARB will almost certainly continue its easing cycle. The chances of a 50bp cut at its the next meeting …
23rd October 2024
SARB lays out requirements for lower rates The South African Reserve Bank’s Monetary Policy Review (MPR) released this week made clear that recommitting to fiscal consolidation and pushing through structural reforms are key to creating extra space for …
18th October 2024
Several EMs have reached provisional agreements with creditors to restructure their sovereign debts in recent months, including Zambia, Ukraine, Sri Lanka and Ghana. In principle, restructurings should pave the way for improved fiscal positions, stronger …
17th October 2024
South Africa’s economy continued to pick-up in the middle of Q3 but the recovery is taking place at different speeds across sectors; lower inflation is supporting consumer-facing sectors but industry is lagging behind. As the drag from supply-side …
16th October 2024
Inflation picks up, one more rate hike lies in store Nigeria’s headline inflation picked up to 32.7% y/y in September, confirming that the CBN’s fears about upside risks from last month’s petrol price hikes were not misplaced. We think the CBN will …
15th October 2024
South Africa’s Finance Minister Enoch Godongwana will be in the unusual position of presenting the Medium-Term Budget Policy Statement (MTBPS) later this month against the backdrop of a sharp improvement in the public finances. And he is likely to use the …
Kenya’s second consecutive 75bp cut Kenya’s lowered its policy rate by 75bp this week and continued disinflation alongside an improved external environment mean that Kenya will deliver further monetary loosening over the coming months. Similar trends are …
11th October 2024
Mozambique votes amid positive gas news Mozambicans head to the polls on Wednesday (9 th ) with the ruling party, Fremilo, widely expected to hold on to power. The elections come amid growing signals that key gas projects, which are vital to the …
4th October 2024
The Nigerian naira has fallen by more than 70% against the dollar since President Tinubu came to office, which has contributed to a surge in inflation that has weighed on economic growth. There are signs that some of the benefits from a weaker …
3rd October 2024
Sharp rise in PMI suggests economic recovery is on track South Africa’s manufacturing PMI rebounded in August, finally replicating the improvements we have seen in other survey indicators. A backdrop of interest rate cuts and improving supply conditions …
1st October 2024
CBN rate hikes about inflation and credibility The Central Bank of Nigeria’s surprise hike this week highlighted the greater progress that the MPC wants to see on the inflation front and also importantly its steadfast ambition to restore its trust and …
27th September 2024
Africa Chart Pack (Sep. 2024) …
Overview – A combination of falling inflation and looser monetary policy should help growth to accelerate across Sub-Saharan Africa from early next year. But tight fiscal policy will constrain the recovery and our growth forecasts sit below the consensus. …
25th September 2024
Cardoso’s surprise 50bp hike may not be the last The Central Bank of Nigeria surprised many by raising its policy rate by 50bp to 27.25%, at its meeting today, and Governor Cardoso’s hawkishness about the risks emanating from sticky inflation, energy …
24th September 2024
SARB predicts higher growth and lower inflation The South African Reserve Bank (SARB) outlined a “goldilocks” scenario of stronger growth and lower inflation at its MPC meeting this week. The actual decision to cut the benchmark repo rate by 25bp, to …
20th September 2024
The South African Reserve Bank finally joined the EM easing cycle today, lowering its repo rate by 25bp to 8.00%. While the MPC clearly has some lingering concerns about the inflation outlook, we think sluggish growth and at-target inflation will provide …
19th September 2024
SARB cautiously cuts by 25bp The South African Reserve Bank finally joined other EM economies in starting its monetary policy easing cycle, lowering its repo rate by 25bp to 8.00%. While the decision to cut was unanimous, the MPC did consider both holding …
South Africa’s mixed recovery South Africa’s economy is enduring a clear divergence in its economic recovery. Consumer-facing sectors appear to be performing better but industry, particularly mining, continues to struggle. We think interest rate cuts will …
18th September 2024
Drop in inflation sets the stage for rate cut tomorrow The dip in South Africa’s headline inflation rate, to 4.4% y/y, in August and the further decline in core inflation all but seals the deal on the SARB start an easing cycle tomorrow. We have pencilled …
Disinflation continues, CBN in place to cut rates yet Nigeria’s headline inflation rate dipped to 32.2% y/y in August, confirming the disinflation trend is firmly on course as the pass through from previous sharp falls in the naira continues to fade. This …
16th September 2024
SARB set to join the EM rate-cutting party The current make-up of the MPC means that it will be a close call, but we expect the South African Reserve Bank to embark on an easing cycle next week. How quickly rates come down, though, partly depends on …
13th September 2024
The Fed’s upcoming monetary easing cycle will probably provide less of a tailwind to EMs than is widely thought. While it’s likely to give some central banks (such as in the Gulf, Mexico and Indonesia) a green light to lower interest rates, EM rate …
12th September 2024
SA GDP rebounds in Q2, surveys muddy the water Data released this week showed that South Africa’s economy picked up in Q2 and, while August’s manufacturing PMI painted a downbeat picture, other key surveys released this week were more positive. On …
6th September 2024
