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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 …
16th January 2020
South Africa: Latest figures point to Q4 decline Surveys and activity data released this week added to the evidence that South Africa’s economy contracted in the fourth quarter, which would have tipped the country into another technical recession. …
10th January 2020
South Africa’s manufacturing sector was struggling even before December’s power cuts, so production almost certainly fell in Q4. Given weakness in other sectors, we think that South Africa slipped into another technical recession last quarter. Figures …
9th January 2020
PMI suggests weakness continued in December South Africa’s manufacturing PMI edged lower in December, adding to the evidence that the economy remained weak in Q4 and raising the prospect of another technical recession. Figures released earlier today …
8th January 2020
Rebranding the West African CFA franc as the “Eco” will have little economic effect; the new currency seems likely to be governed by the same FX regime as its controversial predecessor. The move may, however, scupper plans for a region-wide currency …
7th January 2020
South Africa: growing trade surplus not so positive The improvement in South Africa’s trade surplus in November was not the rare piece of positive news it first appeared and is merely a reflection of the weakness of the economy. The rise in the trade …
3rd January 2020
Nigeria: Trade restrictions hurt consumers Nigerian inflation jumped to 11.9% y/y in November, strengthening our view that recent border closures have pushed up prices. This will delay rate cuts until late next year. (See Chart 1.) Chart 1: Nigeria …
20th December 2019
To mark the new year, our various teams have published a series of key calls notes setting out what to watch for in 2020. This Update wraps up some of our key views for Sub-Saharan Africa. While growth in Sub-Saharan Africa will almost certainly …
19th December 2019
The final round of South African data released this year supported our view that the economy faltered in recent months. Output fell by 0.6% q/q saar in Q3, and the latest figures suggest that the economy may have entered another technical recession in Q4. …
18th December 2019
Inflation on the rise, rates to remain on hold Nigerian inflation picked up again in November, driven mostly by rising food inflation. We think that the headline rate will continue to climb over the coming months and that policymakers will leave their key …
17th December 2019
South Africa: Recession risks rising Activity data released this week showed that South Africa’s economy continued to contract in October , raising the prospect that the country has entered a technical recession. (See Chart 1.). Chart 1: GDP & CE GDP …
13th December 2019
Activity data suggest that South Africa’s economy continued to contract in October . Given the escalation of power sector problems more recently, it’s likely that the economy has now entered recession. Activity figures released today showed that mining …
12th December 2019
Inflation weak, but will pick up in 2020 South African inflation stayed very weak in November, but petrol prices will push up the headline rate in December. Despite a flagging economy, we doubt that the SARB will cut its key policy rate anytime soon. …
11th December 2019
Given the government’s tendency to overspend in election years, we think that Ghana’s budget deficit will rise to about 8% of GDP next year. This will heighten investor concerns and put pressure on the currency and sovereign bonds. After narrowing as part …
10th December 2019
Severe power cuts in will weigh on the economy in Q4, and raise the serious risk of another technical recession. Even if the economy does manage to return to growth this quarter, recent weakness has set the stage for a disappointing 2020. Our …
South Africa: Weak Q3, and trouble ahead Data released this week showed that South Africa’s economy contracted again in the third quarter, and more timely figures suggest that conditions remained bleak in Q4 - raising the spectre of another recession. The …
6th December 2019
The sharp contraction in South African output in Q3 strengthened our view that trend growth in the country is flagging, and that GDP will only rise by a meagre 0.5% in 2020. Figures released today showed that South African GDP contracted by 0.6% in Q3 at …
3rd December 2019
PMI points to continued weakness South Africa’s manufacturing PMI slipped again in November, adding to the evidence that the economy remained weak in Q4. Figures released earlier today showed that South Africa’s manufacturing PMI fell from 48.1 in October …
2nd December 2019
Nigeria: CBN holds rate, toes government line The governor of the Central Bank of Nigeria (CBN) used this week’s MPC statement to heartily defend the government’s latest round of protectionist policies, which will add to the impression that the bank is …
29th November 2019
Figures released over the past month painted a very downbeat picture of economic conditions in Africa’s two largest economies. Growth in Nigeria did, admittedly, pick up a touch in Q3. But activity remained very weak by past standards, with GDP rising by …
28th November 2019
Governor keeps faith with unconventional policy Nigerian policymakers left their key rate unchanged today, preferring to use unconventional policy rather than rate cuts to boost the economy. We suspect that most of these measures will fail, prompting a …
26th November 2019
Nigeria: New data underlines struggling economy Economic growth in Nigeria remained very weak in Q3 , with the economy again failing to escape the slow-growth trajectory on which it has been stuck since 2017. (See Chart 1.) Chart 1: Nigeria GDP (% y/y) …
22nd November 2019
Economy continues to splutter along Nigeria’s non-oil economy strengthened a touch in Q3, but headline growth remained very weak. Without significant policy change, we expect that the economy will continue to struggle in 2020. National accounts figures …
South African policymakers left their key rate on hold at 6.50% today, and we expect that it will remain on hold going into 2020. But we do admit that the risk of a cut in the middle of next year has increased. South African policymakers’ decision to …
21st November 2019
South Africa’s public debt burden is not too high, but the direction of travel is very worrying. While the structure of the country’s debts and its deep local capital markets make an acute crisis unlikely, the growing debt pile is another factor pushing …
Inflation slips again Weak inflation figures have increased the risk of another rate cut at tomorrow’s MPC meeting. But with inflation set to pick up over the coming months, we expect that the rate will remain on hold. Figures released this morning showed …
20th November 2019
Inflation picks up again, rate cut now unlikely Food prices pushed up Nigerian inflation in October, suggesting that policymakers will leave their key rate on hold next week. Monetary conditions will probably still be loosened using unconventional means. …
18th November 2019
South Africa: More signs of contraction in Q3 Mining figures released this week showed that the sector exceeded downbeat expectations in September, but that output still fell over Q3 as a whole. Indeed, the available activity data suggests that GDP …
15th November 2019
Downbeat activity figures suggest that South Africa’s economy contracted again in Q3. This adds to the evidence that the risks to our below-consensus growth figures are heavily weighted to the downside. Figures released this morning showed that mining …
14th November 2019
The Angolan currency’s recent fall will push up inflation and increase the debt-to-GDP ratio even further. While we don’t think that default is an imminent risk, the government will have to tighten fiscal policy. Consequently, GDP is likely to contract …
13th November 2019
South Africa: Inflation, growth both weak Figures out this week suggested that South Africa’s economy faltered in Q3 and that both inflation growth will be soft in the last quarter of the year. Manufacturing production figures were even worse than most …
8th November 2019
Car troubles send manufacturing into reverse Manufacturing output fell further than expected in September, adding to the evidence that South Africa’s economy contracted over Q3. And a key business survey pointed to continued weakness in early Q4. Figures …
7th November 2019
South Africa: Moody’s won’t be pleased New debt estimates from South Africa’s Treasury will probably prompt Moody’s to adopt a ‘negative’ outlook on the country’s local currency debt rating later today, paving the way for a downgrade to ‘junk’ status. We …
1st November 2019
More evidence of weakness South Africa’s manufacturing PMI came in at 48.1 in October, which wasn’t as bad as most analysts had feared. But the measure still suggests that the economy has remained weak in recent months. Figures released earlier today …
Policymakers in South Africa and Angola admitted the severity of their countries’ economic problems this month, while their Nigerian peers moved further down the road to autarky. South Africa’s finance minister revised his government’s deficit and debt …
31st October 2019
Today’s ‘mini-budget’ was a painful admission that South Africa clearly faces a slowly-unfolding fiscal crisis. The gloomy tone may be an attempt to push for unpalatable economic reforms. But today’s speech makes a negative outlook from Moody’s – which is …
30th October 2019
South African’s finance minister will try to use tomorrow’s budget speech to put a positive spin on a very worrying situation. In striking a compromise between the need to boost the economy with efforts to contain a widening budget deficit, he is unlikely …
29th October 2019
Investors’ worries about South Africa’s power sector often focus on Eskom’s growing debts. But a recent government report has also underlined the risk that the faltering grid will struggle to meet demand over the coming decades, prompting power shortages …
28th October 2019
Angola: Kwanza dives as BNA removes trading cap The National Bank of Angola’s decision to abandon its currency trading band and allow the kwanza to float freely suggests that policymakers are finally getting serious about FX reforms. But, after several …
25th October 2019
Overview – Growth in Sub-Saharan Africa will probably pick up in 2020, but we think that it will be much slower than most expect. The key reason for our downbeat view is South Africa, where we think that weak investment spending, tight policy, and …
23rd October 2019
Inflation slips again, but will soon pick up South African inflation edged down to 4.1% in September, but we expect that increasing fuel price pressures will cause the headline rate to rise later this year, preventing monetary easing. Figures released …
Nigeria: Abuja doubles down on protectionism The Nigerian government unexpectedly banned all trade (imports and exports) across the country’s land borders on Tuesday. Officials said the closure, which they described as an effort to combat smuggling, would …
18th October 2019
South Africa’s retail sector didn’t perform as badly as the mining or manufacturing sectors in August, but there is still a growing risk the economy contracted over Q3 as a whole. Figures released this morning showed that South African retail sales growth …
16th October 2019
Above-target inflation won’t stop policy loosening Inflation in Nigeria picked up to 11.2% y/y in September, but we still expect that policymakers will cut their key rate in November. If policymakers opt to leave the rate on hold, they will probably try …
15th October 2019
Nigeria’s budget: Timing is everything The draft budget published this week was more notable for its timing than its contents. This is the first time in several years that the document has been published in Q3, raising the possibility that lawmakers may …
11th October 2019
Weak industrial figures for August present the very real risk that South Africa’s economy contracted again in Q3. Even if growth remained positive, the recovery seen in Q2 has clearly faded. Manufacturing production continued to decline in year-on-year …
10th October 2019
Côte d’Ivoire’s upcoming elections in 2020 raise political risks facing the economy. But our core view is that the vote will pass peacefully, and that looser fiscal policy combined with more favourable external conditions will boost growth to 7.5% next …
8th October 2019
Nigeria: CBN lending push will have little effect The Central Bank of Nigeria has increased pressure on commercial banks to extend more loans by announcing that the minimum loan-to-deposit ratio will rise from 60% to 65% in December. In aggregate, banks …
4th October 2019
Kenya’s economy remained weak in Q2, but there are signs that the key agricultural sector has held up pretty well given this year’s drought. With the drag from the sector easing, GDP growth will pick up over the remainder of this year and into 2020, when …
3rd October 2019
More evidence of weakness in Q3 South Africa’s PMI slumped to a decade low of 41.6 in September, adding to the evidence that – despite the rebound in Q2 – the underlying pace of economic growth remains very weak. Figures released earlier today showed that …
1st October 2019
