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Fears that last month’s cabinet reshuffle will knock South Africa’s economy off course have dominated the headlines. But it will be some time before we have enough information to fully quantify the impact of President Jacob Zuma’s decision to sack his …
20th April 2017
Slowing inflation in South Africa (which dipped to 6.1% y/y in March) supports our non-consensus view that the Reserve Bank will cut interest rates later this year. … South Africa CPI …
19th April 2017
Activity data suggests that South Africa’s economy had a weak start to the year. Even so, we expect that growth will gain traction later this year, and that the economy will weather the recent political storm. … South Africa: Economy …
13th April 2017
South Africa’s cabinet reshuffle probably won’t have a significant effect on fiscal policy in 2017/2018. In this Update, we highlight what to watch for as the new finance minister settles into his role. … S. African fiscal policy: What would be the first …
11th April 2017
Mounting opposition to President Jacob Zuma has sparked speculation that he could be forced from office. In this Update, we examine the mechanics of removing a South African president. … South Africa: How could Zuma …
6th April 2017
S&P’s decision to cut South Africa’s credit rating to “junk” has focused attention on the country’s current account and budget deficits. But South Africa’s balance sheet is actually in better shape than in recent years, which will limit the economic & …
5th April 2017
South Africa’s manufacturing PMI remained strong in March, pointing to faster growth in Q1. The survey will not, however, have fully captured the hit to confidence caused by the sacking of Pravin Gordhan last week, which will mostly affect Q2. … South …
3rd April 2017
President Jacob Zuma reshuffled his cabinet on 30th March, sacking Finance Minister Pravin Gordhan and replacing some of his many critics with loyalists. The removal of Mr. Gordhan – who was seen as a rare voice of fiscal discipline – caused the rand to …
31st March 2017
Yesterday’s cabinet reshuffle has hit market sentiment towards South Africa. While the move will have an immediate political impact, the negative economic effects may be less significant than some fear. … South Africa: Cabinet reshuffle rocks …
Today’s statement by the governor of the SARB suggests that policymakers will look through the current political crisis. Indeed, the tone of the statement – and the fact that one member voted for a cut – supports our view that the tightening cycle is now …
30th March 2017
In this Update, we provide several scenarios outlining how the political drama sparked by rumours that Finance Minister Pravin Gordhan will be sacked could develop, and what it means for markets. … South Africa: A guide to the latest Zuma-Gordhan …
29th March 2017
Recent reforms to Nigeria’s FX regime have further complicated an already convoluted system, which includes a variety of exchange rates. In this Watch, we provide an overview of the state of the FX system and an estimate of the effective exchange rate …
Were Pravin Gordhan to actually be removed, we think that the rand could fall by another 5% against the USD. Even if he receives another stay of execution, economic factors will cause the currency to weaken over the duration of this year. The South …
28th March 2017
The Bank of Ghana’s sharp rate cut suggests that policy loosening will be more aggressive than we’d previously thought. We’ve revised down our end of year rate forecast from 20.00% to 18.00%. The Central Bank of Kenya left rates on hold, but policy will …
27th March 2017
The falls in South African inflation last month and in the current account deficit in Q4 (data all released today) support our non-consensus view that the Reserve Bank will lower interest rates by year-end. … South Africa CPI (Feb.) & Current Account …
22nd March 2017
Today’s MPC statement suggested that policymakers are – at the very least – considering a shift towards tightening monetary conditions. The communication was, as ever, a bit unclear. We do not expect a meaningful shift in policy anytime soon. … Nigeria: …
21st March 2017
We believe that the economic cycle in Sub-Saharan Africa is turning; after slowing since 2014, growth will accelerate this year. This turnaround will be driven by both global and local factors. The big falls in commodity prices are probably behind us, …
16th March 2017
The fall in retail sales in January is disappointing given the improving picture painted by yesterday’s mining and manufacturing figures. Even so, we expect that growth will pick up later in the year as agricultural production rebounds and inflation …
15th March 2017
The latest output figures all support our view that the worst of South Africa’s economic slump is now behind us. We expect that economic growth will pick up faster than most expect in 2017. … South Africa: Output figures suggest growth picking …
14th March 2017
February’s inflation figures offer the first sign that inflation has peaked. We expect that price growth will weaken this year, but will remain above the CBN’s target. … Nigeria Consumer Prices …
The drought which hit a large part of Africa in 2015 and 2016 had a sizeable impact on economies in the South and East of the continent. Improving conditions will boost GDP growth in South Africa and Ethiopia this year, but agricultural sectors will …
10th March 2017
The looming shutdown of South Africa’s social grant system could temporarily cut consumption by about 0.4%-pts of GDP per month. Policymakers will probably be able to fudge a last-minute deal to keep the system running, but the near miss will raise …
8th March 2017
Nigeria’s Economic Growth & Recovery Plan (which was released this afternoon) provides a refreshingly honest analysis of the country’s economic problems & outlines a variety of sensible reforms. We’re sceptical, though, that Abuja will be willing or able …
7th March 2017
Figures released today confirmed that South Africa’s economy contracted again in Q4. But the underlying figures support our view that growth will pick up faster than most expect in 2017 … South Africa: Economy contracts, but worst now behind …
After a grim 2016, growth in South Africa will recover more quickly than most expect, reaching 2.0% in 2017 and 1.7% in 2018. But this would still be a woeful outcome for a country at South Africa’s income level. And we expect that growth will slow …
3rd March 2017
South Africa’s manufacturing PMI is the latest indicator to suggest that the economy improved at the start of 2017. We expect that growth will accelerate this year. … South Africa Manufacturing PMI …
1st March 2017
Nigeria’s economy contracted by just 1.3% in Q4 2016, confirming our view that the slump bottomed out in Q3. Growth will pick up in 2017, and may even be a bit stronger than most expect. he National Bureau of Statistics reports that the contraction of …
28th February 2017
The introduction of another official FX rate in Nigeria is not (as many seem to suspect) the prelude to abolishing FX controls. Over the longer term, however, we still expect that a weakening of the overvalued currency is inevitable. Nigerian policymakers …
23rd February 2017
South Africa’s budget for the 2017/18 fiscal year, which envisages a fiscal squeeze of around 0.5% of GDP, looks a bit more plausible than previous budget projections. But it now seems that domestic politics rather than the fiscal targets will be key to …
22nd February 2017
New official economic data have revealed that the economies of Angola and Ghana are in much worse shape than we had previously believed. The revisions should draw attention to the weak statistical capacity of many African states, which raise the risk of …
21st February 2017
Revised official GDP figures show that Angola’s economic slump is even worse than we’d thought. The revisions add to our concerns about the sustainability of the country’s large debt burden. Angola’s statistics agency could hardly have drawn less …
16th February 2017
December’s retail sales figures were weaker than expected, but tepid growth in the sector was still probably enough to prevent the South African economy from contracting in Q4. … South Africa: Economy stagnated in …
15th February 2017
The sharper-than-expected decline in South African inflation – particularly core inflation – last month supports our view that the country’s monetary tightening cycle is now over. … South Africa Consumer Prices …
Nigeria’s successful Eurobond issue late last week provided another sign that the economy is over the worst of the recent downturn. Hopes for a quick recovery, however, are likely to be disappointed. … Nigeria over the worst, but recovery will be …
13th February 2017
The sharper-than-expected 2.0% y/y fall in South African manufacturing production in December appears to be related primarily to working day effects. The underlying trend appears to be one of very slow improvement at the end of last year. … South Africa …
9th February 2017
The jump in South African retail sales in November has raised hopes in some quarters that consumer spending could be on the brink of a recovery. However, as we explain in this Watch, there are strong reasons to think that household consumption will expand …
8th February 2017
The significant improvement of South Africa’s manufacturing PMI is a rare positive surprise. But given the measure’s mixed performance in recent months, we will wait for more data before seriously questioning our below-consensus views. … South Africa …
1st February 2017
Data published over the past month provided further evidence that economic growth in the region was very sluggish towards the end of last year. Q3 GDP figures did, admittedly, show that growth picked up a bit in Ghana and Botswana. But growth slowed in …
26th January 2017
The hawkish statement by the South African MPC today is likely to focus attention in the markets on the possibility of rate hikes over the coming months. However, while inflation will remain well above target over Q1, this should be temporary and we think …
24th January 2017
Mozambique’s missed bond payment this week grabbed the headlines, but the market reaction was muted. Meanwhile, rising commodity prices have supported strong gains in South Africa’s currency and equity market. Mozambique’s slow-rolling debt crisis made …
20th January 2017
Higher fuel prices will keep South Africa’s headline inflation rate above the Reserve Bank’s target range over the first quarter of this year, but slowing food inflation will bring it back within target by Q2. Overall, we expect inflation to average 5.5% …
19th January 2017
South Africa’s surprisingly strong retail sales figures for November provided a rare piece of good news, but the economy remains extremely weak. And there’s still a significant chance that GDP contracted in the final quarter of last year. … South Africa: …
18th January 2017
Last week’s abortive army mutiny has focused attention on the political fragility of Côte d’Ivoire, which suffered a series of political and economic crises between 1993 and 2011. But we expect that the economy will remain an outperformer. … Côte …
13th January 2017
The rebound in South African manufacturing output in November is encouraging. But we expect that this was probably a blip rather than the beginning of a lasting acceleration. Figures released today by Statistics South Africa showed that manufacturing …
12th January 2017
Nigerian policymakers seem committed to the FX policies that have strangled their country’s economy. The situation is, however, unsustainable. We expect that the currency will be devalued again in 2017. … Nigeria: Naira fix will prove unsustainable in …
21st December 2016
Ghana’s recent election is, first and foremost, a ringing political success. On the economic front, we doubt that the election will trigger a sharp change in policy. But given that Ghana’s economy was already set for a turnaround, President-elect Nana …
16th December 2016
The latest figures from across Africa suggest that most economies in the region continued to perform poorly at the end of 2016. Activity data from South Africa suggest that the region’s most industrialised economy shifted into reverse at the start of Q4. …
15th December 2016
President Muhammadu Buhari’s latest budget proposal is overly ambitious; we expect that both spending and revenue will disappoint. While Mr. Buhari presented his spending plan as way of lifting the economy out of recession, he continues to cling to his …
14th December 2016
October output data suggest that, after a very weak Q3, South Africa’s economy may have contracted outright at the start of Q4. Figures released today show that retail sales fell by 0.2% y/y in October. The median forecast of the analysts polled by …
South Africa’s current account position deteriorated again in Q3. The wide deficit is the key reason why we expect that the rand will remain under pressure in 2017. … S. Africa Current Account …
9th December 2016
