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Soft core inflation, economic setbacks to keep rates on hold Although South Africa’s headline inflation rate jumped to a multi-year high of 5.2% y/y last month, the weakness of core inflation and the recent tightening of lockdown measures means that the …
23rd June 2021
South Africa: a bumpy second quarter The South African retail sales figures out this week add to the evidence that the economic recovery has been weak and bumpy during the second quarter. Retail sales dropped by 0.8% m/m in April, adding to a weak set of …
18th June 2021
Inflation probably past its peak The second consecutive drop in Nigeria’s headline inflation rate, to 17.9% y/y in May, will probably go some way towards easing policymakers’ recent concerns about high and rising inflation. While we expect inflation to …
15th June 2021
Nigeria’s government has turned to the central bank to plug ever larger budget deficits in recent years and policymakers are unlikely to kick their deficit monetisation habit, particularly if the fiscal position worsens next year (as we expect). This will …
14th June 2021
Vaccinating the world: tides turning? G7 leaders meeting this week are ramping up efforts to provide more vaccines to the developing world, which could give a lift to struggling inoculation campaigns and economic recoveries in Africa. Reports suggest …
11th June 2021
South African hard activity data for April painted a mixed picture about the rebound in the mining and manufacturing sectors. By and large, though, the economy is in for a slow and bumpy recovery. Activity data published by Stats SA today showed that …
10th June 2021
Smaller-than-expected hit from second wave South Africa’s economy weathered a second virus wave relatively well, but with cases rising again and other headwinds hanging over the outlook, the recent strength of the recovery is unlikely to last. As measured …
8th June 2021
SA lockdown level up, recovery outlook (still) down The recent tightening of containment measures to curb South Africa’s third virus wave is unlikely to be as damaging for the economy as earlier rounds of restrictions. Even so, the prospect of further …
4th June 2021
PMI up, but headwinds remain The rise in South Africa’s manufacturing PMI in May points to an improvement in underlying economic conditions in the sector, but we think that the recovery will be held back by key headwinds including another virus surge, …
1st June 2021
Making it official: Nigeria’s devaluation Policymakers at the Central Bank of Nigeria (CBN) appear to have bowed to pressure to devalue the official exchange rate, and finally acknowledged the move. But a unified and fairly valued naira that many are …
28th May 2021
Currencies of the two biggest economies in Africa have had contrasting fortunes recently, with Nigeria’s official naira exchange rate recently devalued but the South African rand soaring on the back of higher metals prices. Nigerian policymakers have …
27th May 2021
Policymakers in Nigeria kept their benchmark rate on hold at 11.50% at today’s MPC meeting, opting to emphasise the fragile nature of the economic recovery over elevated inflation. With price pressures likely to ease, we think that monetary policy …
25th May 2021
The pick-up in Nigeria’s GDP growth in Q1 was driven in large part by the oil sector and rising oil output will support a further acceleration in growth over the coming quarters. But FX restrictions, limited fiscal support and a very slow vaccine rollout …
24th May 2021
Nigeria’s plans external borrowing as naira falls(?) External borrowing plans put forward by Nigeria’s president this week would leave the debt position even more vulnerable to falls in the naira. This week, President Buhari submitted a request to the …
21st May 2021
Sub-Saharan Africa’s already slow vaccination campaigns received another blow with news this week that a key supplier, India’s Serum Institute, is delaying shipments further. African policymakers will probably struggle to fill the vaccine supply gap and, …
Policymakers in South Africa kept their benchmark rate unchanged at 3.50% today, while laying the foundations for normalising monetary policy. We think that rate hikes are some time off as the Reserve Bank’s focus will remain squarely on supporting a weak …
20th May 2021
South Africa’s hard activity data for March showed a strong rebound in industrial sectors while the retail sector struggled. Over Q1 as a whole, GDP probably managed to expand by about 1.5% q/q on an annualised basis but major headwinds will keep economic …
19th May 2021
Inflation jump unlikely to trouble the SARB The jump in South Africa’s headline inflation in April, to 4.4% y/y, was driven by energy price effects but there were signs that broader price pressures are starting to build. But even so, we think that the …
African economies have benefitted from the rally in commodity prices in recent months, but we think that most of the gains from the terms of trade improvements are behind us. In the coming quarters, net commodity exports are likely to worsen in most …
18th May 2021
Surprise drop in inflation to back up MPC’s dovish majority The slight drop in Nigeria’s headline inflation rate, to 18.1% y/y in April, on the back of easing food price pressures will provide some ammunition to the doves on the MPC and means that it is …
17th May 2021
South Africa: rand fortunes to reverse The South African rand has been a star performer amongst major EM currencies so far this year, but we think that it will suffer one of the biggest losses against the US dollar by year-end. So far this year, the rand …
14th May 2021
South African hard activity data for March paint a bright picture of the recovery in the mining and manufacturing sectors. The easing of lockdown measures combined with favourable base effects are probably at play. We suspect the road ahead will be …
13th May 2021
Security problems in Mozambique are putting huge natural gas investment projects at risk, clouding the country’s otherwise bright economic outlook while reigniting default concerns. In the early 2010s, major oil companies discovered natural gas off the …
12th May 2021
South African politics: intra-ANC balance tilting The suspension of Ace Magashule, the Secretary General of South Africa’s ruling ANC party is likely to go some way in strengthening the hand of President Cyril Ramaphosa in an intra-party fight. But the …
7th May 2021
Recently released survey data from South Africa point to a marked improvement in economic conditions but there were further signs that firms are suffering from supply chain disruptions. What’s more, we think that the slow vaccine rollout and fiscal …
5th May 2021
Ripple effects from India’s virus wave India’s unabating second virus wave risks further delays to vaccine exports through the Covax initiative to much of Sub-Saharan Africa, which would set back economic recoveries further. South Africa seems somewhat …
30th April 2021
The sharp rises in copper and iron ore prices this month will have given a much-needed boost to African producers such as Zambia and South Africa. Gold also traded higher in April compared to March, supporting recoveries in the likes of Côte d’Ivoire, …
29th April 2021
Overview – Slow vaccine rollouts, tight fiscal policy and weakness in tourism sectors will hold back recoveries across Sub-Saharan Africa. Virus containment measures will probably remain in place for some time, depressing activity. Meanwhile, some …
28th April 2021
Tussle over wages in South Africa Trade unions are ramping up the pressure on South Africa’s government and state-owned enterprises to increase salaries yet austerity plans hinge on a public sector wage freeze. The credibility of the government’s …
23rd April 2021
Rising energy inflation masks weak core price pressures South Africa’s headline inflation rate crept up to 3.2% y/y in March but this was almost entirely due to energy price effects that will become more pronounced this quarter. In contrast, underlying …
21st April 2021
South Africa: A series of unfortunate vaccine events The announcement this week that South Africa is suspending the roll-out of Johnson&Johnson vaccines, on which it heavily relies, risks further delaying an already slow vaccine campaign. The news follows …
16th April 2021
Soaring inflation to increase pressure on policymakers to hike The latest jump in Nigerian inflation, to 18.2% y/y in March, will probably reinforce the views of the hawkish minority on the central bank’s MPC. Our base case is that the majority of MPC …
15th April 2021
South Africa’s hard activity data for February show that the recovery resumed following a January slump on the back of a second virus wave. While the economy will probably finish Q1 on a stronger note, we think that major headwinds will weigh on activity …
14th April 2021
The COVID-19 crisis has caused bad loans at South Africa’s banks to rise, but the impact so far has not been as bad as feared. That said, the hit to profitability in the banking sector, combined with an apparent reluctance among households and firms to …
SDRs & DSSI: a bit more breathing space A flurry of global action this week to help improve low-income countries’ balance sheets is likely to provide only short-term relief and, in the meantime, efforts to provide longer-lasting help to debt distressed …
9th April 2021
The road to recovery in South Africa’s manufacturing sector will probably be slow and bumpy. Weak domestic demand and persistent power cuts will act as key headwinds, although export-oriented sectors are likely to benefit from a continued rebound in …
8th April 2021
Pulling back the curtain on debt risks in Africa Leaders of several multilateral organizations have warned about debt risks in developing countries. Such vulnerabilities are high in much of Sub-Saharan Africa, but immediate debt risks are probably …
1st April 2021
PMI jumps, but recovery still faces key headwinds The sharp rise in South Africa’s manufacturing PMI in March suggests that the sector bounced back quickly as virus containment measures were eased. But the recovery will continue to be held back by a slow …
Central banks in Sub-Saharan Africa bucked a recent “trend” of interest rate hikes in other emerging markets this month. Policymakers in South Africa, Nigeria, Kenya and Angola all kept their benchmark rates unchanged. The backdrop of rising US Treasury …
30th March 2021
SA Reserve Bank nowhere near a hawkish pivot South Africa’s monetary policy stance is likely to remain accommodative for some time, going against market expectations and the projection model of the Reserve Bank (SARB). This week’s decision to keep the …
26th March 2021
Policymakers in South Africa kept their benchmark rate unchanged at 3.50% today, breaking a recent wave of EM central bank decisions to tighten policy. We suspect that the country’s weak economic recovery and subdued inflation means that policy will stay …
25th March 2021
Soft inflation reading another reason to expect Reserve Bank to hold The fall in South Africa’s headline inflation rate, to 2.9% y/y, in February almost certainly rules out a hike in interest rates at Thursday’s MPC meeting. We think that the repo rate …
24th March 2021
Policymakers in Nigeria opted to keep their benchmark rate unchanged at 11.50% at today’s MPC meeting in the face of rising inflation and a weak recovery. We don’t think that a hawkish minority will turn into a majority in the coming months and, if …
23rd March 2021
Nigeria lying in economic bed policymakers made The past week has brought further evidence that Nigeria is suffering from stagflation and we suspect it’s a ‘chronic condition’ arising from poor policy choices rather than an ‘acute disease’. Price …
19th March 2021
South Africa’s Reserve Bank (SARB) is unlikely to be in a rush to follow other EM central banks in tightening monetary policy. We think the policy rate will be on hold this year and probably in 2022 too. This week has seen central banks in Brazil, Russia …
Nigeria’s budget deficit is set to narrow sharply this year as oil revenues increase and the government fails to meet ambitious capital spending plans. The shortfall should be easily covered by domestic borrowing but, if we’re right in expecting oil …
South Africa’s hard activity data for January show that virus-related restrictions meant that the economy started the year on a very weak footing. We think that the recovery will struggle to gain much momentum over the coming months. Activity data …
17th March 2021
Record-high food inflation pushing up headline rate The latest jump in Nigerian inflation, to 17.3% y/y in February is unlikely to prompt the central bank to tighten monetary policy as concerns about a weak recovery mount. Figures released today showed …
16th March 2021
Sub-Saharan Africa back to bond markets African policymakers seem to be turning increasingly to international bond markets to finance budget deficits this year. Last November, Côte d’Ivoire became the first country in Sub-Saharan Africa to issue sovereign …
12th March 2021
Tighter virus containment measures imposed in late-2020 in South Africa weighed on manufacturing and mining output in January. We think that industrial activity picked up more recently, but the recovery will be held back by power cuts, a slow vaccine …
11th March 2021
