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South Africa’s hard activity data for October serve as a reality check following a decent rebound in GDP in Q3, suggesting that the pace of the recovery slowed markedly at the start of Q4. A second wave of COVID-19 has increased the possibility of a …
10th December 2020
Inflation edges down and will remain subdued The slight drop in South African inflation, to 3.2% y/y in November, will probably be followed by similarly soft readings in the near term. This, coming alongside a lacklustre economic recovery, means that …
9th December 2020
Headwinds on the horizon following decent Q3 recovery The stronger-than-expected rebound in South Africa’s GDP in Q3 is overshadowed by more recent data pointing to a stuttering recovery. And concerns about a second wave of COVID-19 as well as harsh …
8th December 2020
SA: tighter restrictions but one eye on the economy South African President Cyril Ramaphosa’s speech to the nation last night suggests that, for now at least, the government is continuing to prioritise the economy over battling a second wave of COVID-19. …
4th December 2020
The distribution of effective COVID-19 vaccines is likely to be much slower in Africa than in many other parts of the world and the “vaccine bounce” in domestic economic activity will probably also be more muted. Those countries that will benefit the most …
3rd December 2020
Recovery on ice The sharp fall in South Africa’s manufacturing PMI in November points to the recovery hitting the brakes in the middle of Q4 and, while recent developments regarding vaccines have brightened the outlook, harsh austerity will act as a key …
1st December 2020
Encouraging news about highly effective coronavirus vaccine trials has brightened Sub-Saharan Africa’s economic outlook. However, the region is facing higher barriers compared to many other parts of the world due to a lack of advance purchase agreements …
27th November 2020
Nigerian reforms: blowing hot and cold Mixed signals from recent policy announcements in Nigeria raise doubts about the administration’s commitment to pro-business reforms, most notably in relation to the currency. The announcement by the Central Bank of …
Price pressures pick up The rise in South African inflation, to 3.3% y/y in October, was driven by stronger food inflation and so is unlikely to be a major concern for the Reserve Bank. Subdued core price pressures and a weak economic recovery mean that …
25th November 2020
Policymakers in Nigeria kept their benchmark rate unchanged at 11.50% today, highlighting the dilemma they face due to high inflation and a weak economy. But we think that the central bank will, on balance, opt to provide more monetary stimulus in early …
24th November 2020
Nigeria’s Q3 GDP data showed that ongoing weakness in the oil sector was more than offset by a rebound in the non-oil economy and we expect this two-speed recovery to continue over the coming quarters. Figures released over the weekend showed that …
23rd November 2020
Crawling out of the pandemic era A string of good news from COVID-19 vaccine producers may be followed by further positive updates in the coming weeks, but it is likely to take longer for the “vaccine boost” to reach much of Sub-Saharan Africa compared to …
20th November 2020
Policymakers in South Africa kept their benchmark rate unchanged at 3.50% today, but the close decision underlines lingering concerns about a weak recovery and subdued inflation. Even if the Reserve Bank refrains from further rate cuts over the coming …
19th November 2020
South Africa’s hard activity data for September point to a lacklustre economic recovery in Q3 but this is unlikely to prompt the Reserve Bank to deliver further monetary stimulus at tomorrow’s MPC meeting – we expect the policy rate to be left unchanged …
18th November 2020
There has been much less progress towards debt relief for African economies than many had hoped. And governments’ diverse array of creditors means that the “Common Framework” recently unveiled by the G20 to help debt distressed EMs will struggle to gain …
16th November 2020
Another jump in inflation The rise in Nigerian inflation in October, to 14.2% y/y, will probably prevent policymakers from continuing their easing cycle next week. But we think that further cuts lie in store in early 2021. Figures released today showed …
Warnings against vaccine euphoria The announcement this week of a successful trial of a COVID-19 vaccine is without doubt good news, even as potential access and distribution issues could test policymakers in the region. But the economic gains may not be …
13th November 2020
The easing of containment measures in South Africa in September supported industrial activity, but the recovery remains sluggish. Leading indicators suggest that the pace of recovery waned further in Q4. Activity data published by Stats SA today showed …
12th November 2020
The escalation of political tensions in Ethiopia into outright military conflict threatens to morph into civil war that would push the economy into a deep recession and raise the risk of a sovereign default. Even if this is avoided, Ethiopia’s reputation …
10th November 2020
Political tensions raise economic stakes Frictions between Ethiopia’s federal government and the Tigray region turned into military confrontation this week, which will inflict damage not only on the population but also on the economy. The relationship …
6th November 2020
Pick-up in headline index hides weakness in recovery The rise in South Africa’s manufacturing PMI in October was distorted by a pick-up in supplier delivery times and, if anything, the survey suggests that the recovery continued to lose steam at the start …
2nd November 2020
South Africa: debt hopes hang by a thread South Africa’s Medium Term Budget Statement this week outlined harsh austerity measures, but it wouldn’t take much to knock the plans off course and leave debt on an unsustainable trajectory. We looked in detail …
30th October 2020
Political developments dominating the news in Sub-Saharan Africa over the past month threaten to add to the headwinds facing economic recoveries. Protests in Nigeria that were initially focused on police brutality have morphed into broader discontent with …
29th October 2020
South Africa’s Finance Minister Tito Mboweni today fleshed out harsh austerity plans for the next few fiscal years. But the emphasis on spending cuts, including a three-year public wage freeze, will be politically difficult to push through. The debt …
28th October 2020
Rate cuts unlikely to follow slight drop in inflation The small drop in South African inflation, to 3.0% y/y in September, won’t be sufficient to prompt policymakers to resume their easing cycle. Equally, it reinforces the idea that price pressures are …
South Africa: fears rise of second COVID wave The recent rise in newly recorded COVID-19 cases in South Africa appears to reflect higher testing more than anything else. But it’s a reminder that a renewed outbreak of the virus poses a major downside risk …
23rd October 2020
Overview – Recoveries across Sub-Saharan Africa will be weak, with the region’s three largest economies – Nigeria, South Africa and Angola – set to fare particularly badly. A rebound in tourism sectors has been delayed, low oil prices will weigh on growth …
22nd October 2020
If the recent wave of protests across Nigeria and the curfew in Lagos come to an end in the next day or two, the economic impact should be limited. But if these run on for longer, the recovery in the non-oil sector would be derailed in Q4, and …
21st October 2020
Zambia stares into the default abyss A stand-off between Zambia’s government, China and private creditors is pushing the continent’s second-largest copper producer towards default. Last month, the Zambian government requested a deferral of interest …
16th October 2020
Rise in inflation to push next rate cut into 2021 The increase in Nigerian inflation in September, to 13.7% y/y, will probably be followed by similarly high inflation readings in the coming months. The central bank is likely to keep its benchmark rate on …
15th October 2020
Hard activity data from South Africa released this week point to continued weakness in the economic recovery in August despite the easing of containment measures. Activity data published by Stats SA today showed that retail sales rose by 4.0% m/m in …
14th October 2020
The post-Global Financial Crisis (GFC) experience suggests that the South African Reserve Bank (SARB) is unlikely to raise the repo rate within our near-term forecast horizon (to end-2022). Investors are anticipating that the SARB will hike the policy …
12th October 2020
This week’s 2021 budget presentation by Nigeria’s President Buhari points to challenges in financing the government’s ambitious spending plans, raising the risk that the authorities turn to financial repression policies, including outright deficit …
9th October 2020
Policymakers in Nigeria are taking steps in the right direction with recent market-friendly reforms, from liberalizing petrol prices to moves towards exchange rate unification. But the government hasn’t shed its unorthodox and protectionist tendencies, …
7th October 2020
Debt stand-off in Zambia Zambia’s first steps towards debt restructuring have not got off to a good start, reinforcing our fears that the process will be long and arduous. Last week, the Zambian government announced that it had requested a deferral of …
2nd October 2020
Rocky road to recovery The rise in in South Africa’s manufacturing PMI in September suggests that further easing of the country’s lockdown measures has boosted activity. But there remain many obstacles to a sustained rebound in the sector. Figures …
1st October 2020
Softer inflation unlikely to change policymakers’ mind The slight fall in South African inflation, to 3.1% y/y in August, is likely to be followed by subdued inflation rates over the next few months. Even so, the SARB’s easing cycle has now come to an …
30th September 2020
Nigeria is facing an uphill battle to breathe life into its economic recovery. Following a sharp 6.1% y/y fall in GDP in Q2, more recent figures suggest that activity remains muted. Admittedly, Google mobility data suggest that visits to retail and …
29th September 2020
Private creditor debt relief: going separate ways This week’s moves to put very large debt burdens in Angola and Zambia on a sustainable path offer some lessons for the rest of the region, and private bondholders. In short, there are many roads to debt …
25th September 2020
Today’s decision by the Central Bank of Nigeria (CBN) to lower the benchmark rate, from 12.50% to 11.50%, shows that policymakers have put aside their concerns about inflation and are increasingly spooked by the weakness of the economy. We think that the …
22nd September 2020
IMF increases lending to Angola The approval of Angola’s IMF programme expansion by $765mn this week will go some way towards easing balance of payments pressures, but further debt restructuring is still not out of the question. In addition to disbursing …
18th September 2020
Today’s decision by South African Reserve Bank’s to keep its benchmark rate unchanged probably means that further easing is unlikely to materialise. Even so, monetary conditions are likely to remain very loose in the coming years and we expect rates to …
17th September 2020
Jump in inflation to prevent rate cut… for now The increase in Nigerian inflation in August, to 13.2% y/y, will probably stay the hand of policymakers at next week’s MPC meeting. But, with a weak economic recovery, there may still be scope for an interest …
15th September 2020
Seeing the good, the bad and the ugly in SA data Figures released this week provided little cause for optimism about South Africa’s prospects for a strong rebound in activity. The slew of terrible data might, at least, prompt policymakers to lend more …
11th September 2020
Activity data released today suggest that the pace of South Africa’s economic recovery had already started to slow in July. Taken together with a terrible Q2 GDP outturn, we think that this will give more impetus for the central bank to cut interest rates …
10th September 2020
The recent drop in new Covid-19 cases in much of Sub-Saharan Africa is likely to encourage policymakers to further relax restrictions on economic activity, which will give a leg up to recoveries. The sharp rise in daily new coronavirus cases across much …
9th September 2020
Weak recovery lies in store after massive Q2 hit The huge fall in South Africa’s GDP in Q2 confirms our pessimistic outlook for the economy and, with fiscal austerity on the horizon, the recovery will be weak. Policymakers at the central bank will …
8th September 2020
Ethiopia nudged to progress on Nile dam talks The United States move to partially suspend financial aid to Ethiopia due to the country’s dispute with Sudan and Egypt over the Grand Ethiopian Renaissance Dam (GERD) this week adds to uncertainty surrounding …
4th September 2020
Remittances to Africa appear to have held up fairly well so far but this is unlikely to be sustained. Weaker inflows will drag on economic recoveries and add to balance of payments strains in many countries, most notably Nigeria. The result is that …
2nd September 2020
Manufacturing sector back on the wobbly road to recovery The jump in South Africa’s manufacturing PMI in August confirms that the sector was boosted as the country eased lockdown restrictions further. But with power cuts becoming a problem once again and …
1st September 2020
