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The 10% of GDP emergency fiscal response announced by South Africa’s president last night will help to alleviate some of the strains in the economy caused by the lockdown. But with this coming one month after lockdown started, a lot of damage will already …
22nd April 2020
Rate cut on the horizon despite rise in inflation The slight rise in Nigerian inflation in March, to 12.3% y/y, is unlikely to prevent policymakers from cutting their key rate in May to ease the country’s economic pain caused by the coronavirus. Figures …
21st April 2020
Debt relief on the cards The agreement by the G20 to allow low-income economies to suspend debt payments on bilateral loans this week will take one piece off African policymakers’ plate of economic challenges. Even so, their figurative plates remain …
17th April 2020
Coronavirus: latest on cases & containment This week the tally of coronavirus cases in Sub-Saharan Africa continued to increase, with some policymakers tightening restrictions further. But there are reasons to think that lockdown measures will be less …
9th April 2020
South Africa’s ongoing three-week lockdown means the statistics agency won’t be publishing or collecting data during this time. In this Update , we explain what other data we should look at, what would happen if the lockdown is extended and the …
An increasing number of African governments have imposed lockdowns in an effort to fight Covid-19, but we think the risk that such restrictive measures fail to contain the outbreak is bigger in the region than in other parts of the world. The science of …
6th April 2020
South Africa: Rand on the ropes The South African rand’s slide to record lows this week will probably continue over the coming weeks as risk-off sentiment persists. But the currency will probably rebound later this year as signs of a global recovery from …
3rd April 2020
The coronavirus and low commodity prices are putting pressure on most African economies’ balance of payments positions and pushing many sovereigns closer to default. Besides Zambia, which is already moving towards debt restructuring, the risks are highest …
2nd April 2020
Stronger-than-expected PMI is a misleading indicator South Africa’s PMI jumped in March, but only due to a statistical quirk in the compilation process. The underlying data suggest that the economy was, in fact, weakening even before the recent lockdown. …
1st April 2020
Given the scale of ongoing global market turbulence, Moody’s decision to strip South Africa of its last investment grade rating will have less immediate effect than some had feared. That said, the country’s already grim debt outlook has deteriorated …
30th March 2020
Containment policies tighten…. The 21-day lockdown that took effect on 26 th March in South Africa is the most aggressive containment policy yet tried in any major African economy, but policymakers elsewhere in the region have also been imposing new …
27th March 2020
The rapid pace of the economic and market disruptions caused by the coronavirus mean that data released in recent months probably offer little insight into the current state of African economies. Accordingly, this publication will focus on the most timely …
26th March 2020
President Cyril Ramaphosa’s decision to emulate the lockdowns seen in Europe and East Asia will cause GDP to fall by 6-8% in Q2. It will also be the first real test of whether such policies can be implemented effectively in low income countries. The South …
24th March 2020
The controlled devaluation of the naira will help to preserve Nigeria’s scarce FX reserves and encourage foreign investment inflows. Given, however, that officials opted to maintain a dual-track system, we expect that the FX regime will remain complex and …
23rd March 2020
Coronavirus: African outbreak spreading Figures released this week suggest that the coronavirus outbreak in Sub-Saharan Africa spread rapidly this week. Officially confirmed cases more than tripled. While South Africa has the largest number of confirmed …
20th March 2020
It now seems clear that the coronavirus outbreak will cause greater economic damage than we had initially thought – both globally and within Africa. Growth will slow across the region, with South Africa and tourist-dependent economies like Mauritius …
19th March 2020
South African policymakers appear to have decided that the current grave economic situation requires a bold response, and have moved away from their traditional hawkishness. We expect that they will follow today’s 100bp cut with another 75bp of loosening …
Activity data from January suggest that the economy was already contracting before the coronavirus reached South Africa. The outbreak will add to economic headwinds. Policymakers are likely to spring into action by cutting their key rate on Thursday, but …
18th March 2020
Africa: Coronavirus cases contained, for now The number of confirmed coronavirus cases in Sub-Saharan Africa more than doubled this week, but there are still fewer confirmed cases in the billion-person region than in the US state of Massachusetts. …
13th March 2020
Early signs suggest that economic conditions improved at the start of Q1, but disruptions caused by the coronavirus make it likely that output will have fallen later in the quarter and going into Q2. We expect that the SARB will cut its key policy rate …
12th March 2020
Risk-off sentiment has already battered the rand, but we think that the Nigerian naira and Angolan kwanza will both fall further later this year when policymakers are forced to accept painful devaluations. The kwanza will probably fall furthest, adding to …
11th March 2020
The coronavirus will probably continue to spread in Africa, but the biggest economic hit will come from lower oil prices. Indeed, Angola may suffer a bigger fall in GDP than anywhere outside the worst-affected Asian countries. Predicting the future …
9th March 2020
Coronavirus: Counting the costs in Africa The accelerating spread of the coronavirus has prompted us to update our African economic forecasts. We’ll publish final numbers after today’s OPEC+ meeting gives us a clearer sense of global oil prices, but we …
6th March 2020
Narrower deficit increases chance of longer easing cycle Weak domestic demand in South Africa has narrowed the country’s current account deficit, which should provide some support to the rand and allow the SARB more space to loosen policy. We expect that …
5th March 2020
The sharp fall in South Africa’s GDP in Q4 not only marked a technical recession, but also set up a very weak starting point for 2020. And downside risks are growing with the spread of the coronavirus. Figures released earlier today showed that South …
3rd March 2020
In light of the accelerating spread of the coronavirus – and the economic disruption that is likely to follow – we are pulling down our GDP growth forecasts for Q1 and Q2 of this year. Growth is likely to rebound over the second half of the year, but most …
2nd March 2020
Economy faltering in early 2020 While weak PMIs elsewhere in the EM world were partially due to spill over effects from the coronavirus, the sharp fall in the South African survey largely reflects domestic weaknesses. We suspect that the economy …
South Africa’s budget: an uphill fight Finance Minister Tito Mboweni’s budget speech this week acknowledged the scale of the economic challenges facing South Africa, but we think that the minister’s outlook is still too rosy . The government’s increased …
28th February 2020
Recent news added to our general sense of pessimism about most African economies in 2020. While the region has yet to report any cases of the new coronavirus, falling commodity prices are already dealing a blow to exporters of oil and other industrial …
27th February 2020
The government is trying to balance weak revenue with increased interest and SOE spending by cutting wages and programme costs, which will prove politically difficult. The weakening fiscal position and rising debt burden have further increased the risk of …
26th February 2020
Economy picks up, but remains weak Growth in Nigeria ticked up a notch in Q4, but there is still no sign of a broad-based economic recovery. We expect that the authorities will continue to enact unconventional stimulus policies later this year. National …
24th February 2020
South Africa: Budget will be painful Finance Minister Tito Mboweni’s 26 th February budget speech will have to include tax rises and spending cuts as the government struggles to get a grip on its large deficit while providing financial aid to failing …
21st February 2020
Inflation picked up, only one more cut likely South African inflation jumped to the 4.5% y/y midpoint of policymakers’ target range in January, which strengthens our view that the current easing cycle will end after just one more cut. Figures released …
19th February 2020
Inflation continues to tick up The further rise in Nigerian inflation in January, to 12.1% y/y, suggests that border closures have continued to drive up food prices. This will limit the central bank’s scope to lower interest rates to support the economy, …
18th February 2020
South Africa: Ramaphosa doesn’t rock the boat President Cyril Ramaphosa used Thursday’s State of the Nation Address to outline his plans to reform South Africa’s ailing power sector, but his focus on building consensus among key social actors suggest that …
14th February 2020
President Cyril Ramaphosa’s State of the Nation Address contained a few promising announcements, relating to independent power firms. But his continued stress on the need for consensus strengthened our view that he won’t take the bold steps needed to …
We think that a recent string of on-target inflation data and a less accommodating external environment will delay further interest rate cuts in Ghana. But monetary loosening will probably resume in 2021. Data released this week showed that headline …
13th February 2020
December’s misleadingly strong mining figures shouldn’t distract from evidence that GDP probably contracted in Q4, tipping the country into a recession and creating a very weak starting point for 2020. Figures released today showed that mining output …
Power cuts batter manufacturing sector The South African manufacturing sector’s terrible performance in December has set up a weak start to 2020. And, given that power cuts lasted into January, problems in the sector probably continued. Widespread power …
11th February 2020
Coronavirus: No infections won’t mean no cost Despite the lack of confirmed cases in the region, African economies are probably already feeling the indirect effects of the coronavirus outbreak. African economies are, at least, unlikely to be directly …
7th February 2020
After a severe drought in 2019, Kenya is now facing the worst desert locust outbreak in 70 years. The impact on livelihoods could be devastating, but the economy-wide cost is likely to be limited. Locust outbreaks can inflict significant economic damage …
PMI suggests weakness continued in the New Year South Africa’s manufacturing PMI dropped further in January, adding to the evidence that the economy remained very weak at the start of 2020. Figures released earlier today showed that South Africa’s …
3rd February 2020
Africa: CE pessimism about the usual suspects We published our quarterly Africa Outlook this week, in which we laid out our characteristically below-consensus forecasts for the region. But a look behind the headline number shows that we’re actually pretty …
31st January 2020
African central banks had a busy month in January. Policymakers in South Africa and Kenya surprised the markets (and us) by cutting their key rates by 25bp. We expect that both countries’ central banks will make one further cut, but that rising inflation …
Overview – Economic growth in Africa is likely to come in at just 3% this year, as the slump that began in 2015 drags on. The limit on regional growth will, again, come from South Africa where hopes for a meaningful rebound this year look too optimistic. …
30th January 2020
Nigeria: CBN tweaks policy, but holds the course Policymakers in Abuja kept their key interest rate on hold today, but made a technical adjustment to put a floor under falling interbank rates. Increasing the Cash Reserve Ratio from 22.5% to 27.5% will …
24th January 2020
Inflation picked up, easing cycle will be short South African inflation strengthened in December, and we expect that it will continue to do so in Q1, bringing the current monetary easing cycle to an end after just one more 25bp rate cut. Figures released …
22nd January 2020
South Africa: Recession warnings flashing The latest activity data suggest that the economy strengthened a touch in November, with output probably rising by 0.3% q/q saar. Given that widespread power cuts almost certainly disrupted output in December, we …
17th January 2020
South African policymakers surprised the markets by cutting the repo rate, but with inflation set to rise there is limited room for further easing. We expect just one further 25bp cut. Policymakers at the South African Reserve Bank unanimously voted to …
16th January 2020
Strong November retail sales figures suggest that South Africa’s economy gained ground in the middle of Q4. Given power cuts in December, however, we expect that output still fell over the quarter as a whole. Activity figures released today showed that …
