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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
Kenya: CBK hints at looser policy in 2020 As we’d expected, policymakers at the Central Bank of Kenya (CBK) kept their benchmark rate unchanged at 9.00% for the seventh consecutive meeting this week. New language in the accompanying statement, however, …
27th September 2019
Ethiopia’s investment-focused economic model has attracted widespread praise, but has also created dangerous external vulnerabilities. Were domestic instability or EM-wide risk aversion to cause funding to dry up, the country would quickly face a painful …
26th September 2019
Figures released over the past month brought bad news for almost all of Sub-Saharan Africa’s key economies. After a surprisingly-strong rebound in Q2, growth in South Africa seems to have slowed at the start of Q3. And leading indicators in South Africa, …
Nigeria’s latest budget plan has strengthened our view that the fiscal position is unsustainable and that the country will face some kind of debt crisis within five years. Nigeria’s new fiscal framework makes for sobering reading . The document not only …
25th September 2019
South Africa: Economy falters, no help from SARB Policymakers’ decision to leave their key rate on hold at 6.50% this week suggests to us that the South African Reserve Bank is unlikely to loosen policy further. We’d always argued that inflation would …
20th September 2019
Given policymakers’ decision to keep their key rate on hold at 6.50% today, we now think that South African interest rates will remain unchanged over the coming quarters. Policymakers do not seem inclined to take the opportunity to boost the economy, and …
19th September 2019
Activity data for July suggest that South Africa’s recovery lost steam at the start of Q3. We remain comfortable with our below-consensus growth forecast of 0.5% for this year as a whole. Data released today showed that retail sales rose by 2.0% y/y in …
18th September 2019
Inflation still weak, rate cut likely tomorrow South African inflation remained below the target midpoint in August, which we think will allow policymakers to cut their key rate from 6.50% to 6.25% at their meeting tomorrow. Figures released this morning …
Inflation eases again, rate cut on the way Inflation remained above the central bank’s target in August, but the fact that core inflation slowed has strengthened our view that policymakers will cut their key interest rate in November. Figures released …
17th September 2019
Cutting Nigeria’s oil output: an empty promise? The pledge this week by Nigeria’s oil minister to reduce oil production to fully comply with OPEC+ quotas would, if it materialises, reduce GDP growth significantly. There is a renewed push for OPEC members, …
13th September 2019
Despite the slight improvement in the manufacturing sector, the batch of activity figures for July suggests that South Africa’s economic recovery in Q2 faded at the start of Q3. This adds to reasons to think that the Reserve Bank will cut its key policy …
12th September 2019
Uganda’s balance of payments position is looking increasingly unsustainable. The currency is likely to weaken and domestic demand is set to slow. We think that GDP growth will be a lot weaker than most currently expect over the coming years. Uganda’s …
11th September 2019
South Africa, Nigeria stuck in the slow lane Q2 GDP data released this week supported our view that underlying growth in Africa’s two biggest economies remains weak. In Nigeria, surging oil production wasn’t enough to prevent headline growth from slowing …
6th September 2019
South Africa’s economy made a surprisingly strong recovery in Q2, growing by 3.1% q/q saar, but growth remained weak at a year-on-year rate. Given soft demand and low petrol prices, we expect that inflation will remain subdued, opening a brief window for …
3rd September 2019
Disappointing Q2 GDP figures out today underlined the weakness of Nigeria’s economy. This supported our below-consensus view that growth will remain trapped at around 2% in 2019 and 2020. Figures released this morning showed that economic growth in …
After strong July, PMI tumbles South Africa’s manufacturing PMI fell to 45.7 in August, adding to the evidence that – despite the rebound in Q2 – the underlying pace of economic growth remains weak. Figures released earlier today showed that South …
2nd September 2019
Mozambique: Debt deal is only the first step Even if bondholders agree to the government’s bond restructuring deal – as recent signs suggest they will – Mozambique’s debt problems will be far from over For one thing, the deal only covers the US$727mn …
30th August 2019
Governments across the region made a series of economic policy moves this month, with Ethiopian and South African politicians taking steps forward, and Nigerian ones – again – retreating towards protectionism. In Ethiopia, the government issued a license …
29th August 2019
The unexpected release of economic reform proposals by South Africa’s treasury is probably an attempt to push the president to announce a more ambitious plan at October’s budget speech. The plan contains numerous suggestions that would boost growth in the …
Kenya’s drought will probably push inflation above the CBK’s target range in Q4. But bank will likely look through this spike, as it did in 2017. We think the next rate move will be a 50bp cut in Q4 2020. Inflation picked up again in July, rising from …
28th August 2019
South Africa: Inflation opens window for rate cut News that South African inflation slipped to 4.0% y/y in July supported our view that policymakers at the SARB will cut their key rate to 6.25% in September. As we’d expected, falling petrol prices more …
23rd August 2019
Inflation falls below target, rate cut likely in September South African inflation slipped to just 4.0% y/y in July, supporting our view that policymakers will cut their policy rate from 6.50% to 6.25% in September. This is a strongly non-consensus view. …
21st August 2019
The fall in oil prices this month will create both winners and losers in Africa. But the winners’ gains will be small and spread across dozens of countries, whereas pain will be concentrated in a few economies. Lower energy prices will depress inflation, …
20th August 2019
Nigeria: President calls for tighter FX curbs President Muhammadu Buhari directed the CBN to further restrict importers’ access to the official FX market this week, raising fears that higher food prices would add to inflationary pressures. But the failure …
16th August 2019
The Nigerian president’s call to exclude all food importers from the official FX market will probably be poorly-enforced and have little effect on inflation. But the government’s ever-expanding influence over the nominally-independent central bank will …
15th August 2019
After picking up a touch this year, we think that economic growth in Tanzania will slow in 2020 and in 2021. President John Magufuli’s increasingly erratic policymaking will deter investment while external conditions will cause the country’s terms of …
June retail sales figures released today added to the evidence that the economy returned to growth in Q2. But the recovery was soft – we estimate around 1.6% q/q saar – and we still think that policymakers at the SARB will cut their key rate by 25bp in …
14th August 2019
We’ve cut our end-year rand forecast from an already below-consensus ZAR15/$ to ZAR16.5/$. While risks are growing, we’re holding to our view that the SARB will cut its policy rate by 25bp in September. While most emerging market currencies have weakened …
12th August 2019
ZAR: Currency weakness homegrown The South African rand had a tough time this week, shedding 2.3% against the US dollar. Indeed, the currency is now weaker than our end-year forecast of ZAR15/USD. But while this has coincided with a generalised fall in EM …
9th August 2019
Despite the weak performance of the manufacturing sector, June activity data strengthened our view that South Africa returned to growth in Q2 after a sharp fall in Q1. Combined with recent currency weakness, a brisk recovery raises the risk that …
8th August 2019
Hopes that President Cyril Ramaphosa can quickly revive South Africa’s economy are fading. The real problems are all structural, so even if he does make bold policy changes – far from guaranteed, given political obstacles – these would take years to take …
7th August 2019
Eskom: Between a rock and a hard place… While Eskom’s problems are often blamed on corruption and poor management, its recently-released annual report underlined the scale of the structural challenges facing the firm. Eskom faces the significant …
2nd August 2019
Bouncing back, but economy still pretty weak South Africa’s PMI rebounded to 52.1 in July, adding to signs that the economy gained pace in the middle of the year. Even so, headline growth over 2019 as a whole will be tepid, and we still expect that …
1st August 2019
News that South Africa’s government agreed to provide another 60bn rand (US$4.2bn) bailout to Eskom between now and 2021 caused the rand to weaken by 2.3% against the US dollar due to fears that this will result in the sovereign losing its last …
31st July 2019
Eskom: Another bailout, still real solution A new cash injection for Eskom has underlined the scale of the firm’s problems and increased the risk of a sovereign rating downgrade in November. The government will grant another ZAR60bn in 2019/20 and 2020/21 …
26th July 2019
Growth in China is slowing, but fears of a big drag on Africa are overdone. While the Asian giant’s demand for some commodities will soften, it will remain a key trade and investment partner. Indeed, in a slower-growing but more consumer-focused China may …
25th July 2019
Inflation remains at target, rate cut likely in September South African inflation remained at the 4.5% mid-point of the target range in June, which strengthens our view that policymakers will follow up this month’s 25bp rate cut with another one in …
24th July 2019
Nigerian policymakers held their key rate at 13.50% today, and indicated that they will rely on unconventional policy tools to boost lending over the coming quarters. These are, however, unlikely to work, and we think that this will prompt another 50bp …
23rd July 2019
