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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 …
13th February 2020
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 …
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
