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Hopes that African economies will repeat the economic miracles seen in Asia are, for the most part, misplaced. Rapid population growth will deliver reasonable rates of headline GDP growth, but improvements in per capita income will remain disappointing by …
22nd March 2016
Today’s statements from the Ghanaian and Kenyan Central Banks were more dovish than we had anticipated. This supports our view that the Ghanaian authorities will cut rates later this year, and we have now pencilled in a 50bp cut in Kenya. … Kenya & …
21st March 2016
Today’s interest rate hike in South Africa will be followed with further tightening later this year in response to the deteriorating inflation outlook. … South Africa: Inflation, rand weakness force painful …
17th March 2016
The drop in retail sales growth is the latest figure that suggests that the South African economy lost momentum in January. We expect that GDP growth will be a below-consensus 0.5%. … South Africa Retail Sales …
16th March 2016
Nigerian inflation rose to 11.6% y/y in February, largely due to the falling parallel market exchange rate. This will deal yet another blow to the controversial FX system. … Nigeria Consumer Prices …
15th March 2016
South Africa’s economy narrowly avoided an economic contraction Q4 2015, but the January output figures suggest that GDP may fall this quarter. … South Africa Manufacturing & Mining Output …
10th March 2016
The latest Nigerian GDP figures support our view that growth in Africa’s largest economy will be much weaker than most expect. While Nigeria has been battered by low oil prices, the country’s bungled policy response has made the situation much worse. … …
8th March 2016
The larger-than-expected South African current account deficit in Q4 of last year highlights the country’s external vulnerabilities and means the rand is likely to remain under pressure. Coming alongside above-target inflation, this adds to the reasons to …
South Africa’s disappointing 2016 budget published last month has reinforced concerns about the prospect of a ratings downgrade to junk status. This would clearly be damaging to the government’s policymaking credibility but, as we explain in this Watch , …
2nd March 2016
Weaker-than-expected Q4 GDP data from South Africa underline the economy’s sluggish growth prospects. At the margin, we suspect that these data make it less likely that the Reserve Bank will follow up January’s 50bp interest rate hike with another rate …
1st March 2016
The main reason why South Africa has not followed Brazil into a deep recession is that the shock to its terms of trade has been less extreme. Our core view is that South Africa faces an extended period of very low growth or stagnation, rather than a …
29th February 2016
South Africa’s 2016 budget was a damp squib and is likely to dent the government’s recent efforts to regain economic policymaking credibility. While the budget is now based on more realistic growth forecasts, the revenue-raising measures announced today …
24th February 2016
The strains in Nigeria's balance of payments are growing, threatening to push Sub-Saharan Africa's largest economy into a full-blown crisis. The Nigerian economy has been battered by the falling price of oil, which has slashed government revenue and …
23rd February 2016
Strains in Nigeria’s balance of payments sent the country’s currency tumbling this month, at least on the parallel market, and we think the central bank will eventually have to devalue the official exchange rate. In contrast, the South African rand has …
19th February 2016
South African retail sales figures for December, which showed another surprisingly strong year-on-year rise in purchases, suggest that the economy narrowly avoided a fall in GDP at the end of last year. Nonetheless, the growth outlook for this year is …
17th February 2016
South African inflation accelerated to 6.2% y/y in January in what we believe is the beginning of a food price-driven inflationary spike. Elevated inflation will add to dilemma facing the SARB. … South Africa Consumer Prices …
Nigeria’s currency has come under increasing pressure since the start of the year, and in this Watch we explain why the government’s response is unsustainable and why we think a devaluation of the official exchange rate is inevitable. … Nigeria: …
16th February 2016
The better-than-expected South African manufacturing and mining data for December provided a rare piece of good news for the economy, but even so it looks like GDP growth over Q4 as a whole probably weakened. And the early signs point towards a further …
11th February 2016
A legal case against President Jacob Zuma may further destabilise South Africa’s already febrile political situation. Increased political risk poses a very real threat to the country’s struggling economy. … South Africa: Political risk adds to economic …
10th February 2016
The latest data and surveys from South Africa have been even worse than we had expected, and we have downgraded our 2016 growth forecast to a below-consensus 0.5%. A prolonged period of slow growth will enflame tensions in the sharply divided country, …
4th February 2016
A reported US$3.5bn loan from the World Bank and AfDB would only cover about 15% of Nigeria’s gross external financing requirement. In any case, a loan would come with politically difficult conditions, so we doubt that a deal will be made over the short …
1st February 2016
South Africa’s January manufacturing PMI provided further bad news for the beleaguered economy. The risk of a further slowdown in GDP growth this year is growing. The survey also showed that the fall in the rand has started to feed through into prices, …
The latest drop in oil prices, combined with Abuja’s unorthodox economic policies, sent Nigeria’s financial markets into a tailspin this month. Financial markets elsewhere on the continent also performed poorly as a result of low commodity prices and …
29th January 2016
Recent figures have only strengthened our belief that the challenges facing Africa’s three largest economies are growing. Nigeria’s botched response to low oil prices has caused the currency to plunge on the parallel market, which will spur inflation. The …
28th January 2016
The South African Reserve Bank has raised its key interest rate from 6.25% to 6.75% as inflation concerns outweighed worries about weak growth. We expect the bank will be forced to hike by another 50bp over the course of 2016. … South Africa: Rates …
Central Bank of Nigeria Governor Godwin Emefiele used the post-MPC meeting press conference to reiterate his commitment to retaining controversial FX restrictions. But with strains in the balance of payments building, we believe that the governor will, …
26th January 2016
While the Central Bank of Kenya held rates on hold today, we expect that the Bank will be forced to tighten policy by around 50bp later this year as inflation remains above target. … Kenya: Rates on hold despite higher …
20th January 2016
November’s surprisingly buoyant retail sales figures provide a rare piece of good news for South Africa’s struggling economy. But we expect that rising inflation and tightening monetary policy will weigh on consumer spending in 2016, keeping growth low. …
Low oil prices are battering Nigeria’s export-dependent economy. But it’s the government’s market-distorting response that risks pushing the country into a Venezuela-style crisis. … Nigeria: Policy response pushes economy towards …
18th January 2016
Reports of the end of Nigeria’s costly fuel subsidy scheme are greatly exaggerated. We expect that fuel distributors will require another costly bailout in 2016, which will add to Nigeria’s wide budget deficit. … Nigeria: Fuel subsidy issue still …
15th January 2016
South African mining output did not contract as sharply as was predicted in November, but the weakness of the economy will still put pressure on the SARB to slow its hiking cycle. Even so, with the rand under pressure, we expect that the Bank will hike …
14th January 2016
In this Watch we outline our key views on African currencies in 2016. First, we expect that both the Angolan kwanza and Nigerian naira will be devalued. Second, we expect that the rand will weaken sharply, ending the year at around ZAR18/US$. We also …
13th January 2016
The sharper-than-expected decline of South African manufacturing output in November suggests that GDP growth will disappoint in Q4. Worse, it seems that the hobbled manufacturing sector has not been able to capitalise on the weak rand. … South Africa …
12th January 2016
Nigeria’s cumbersome FX restrictions are strangling economic growth in the country, and are unsustainable given growing pressure on the naira. We expect that the authorities will be forced to devalue the naira in the first half of 2016. … Nigeria: …
6th January 2016
Nigeria’s 2016 budget, presented to parliament yesterday, relies on overly optimistic economic assumptions, although at least the focus on raising capital spending marks a welcome change. … Nigeria: 2016 budget looks too …
23rd December 2015
The South African currency and local equities plunged in December when a botched cabinet reshuffle by President Jacob Zuma caused investors to question the country’s governance. The self-induced crisis provided grim finale for a year that has been …
22nd December 2015
Widespread corruption has long impeded economic growth in Kenya. But while a recent wave of scandals has demoralised some, we believe that the frequent revelation of government malfeasance is a tentative sign that the country’s oversight bodies are doing …
18th December 2015
A recent series of unexpected cabinet reshuffles – in which South Africa had three finance ministers in four days – has dented the political and economic credibility of President Jacob Zuma. The rand fell by over 5% when respected finance minister …
14th December 2015
The surprise removal of South Africa’s respected finance minister has caused investors to reassess their views of South Africa’s struggling economy. Talk of an emergency rate hike is probably overdone, but it does look like inflation and interest rates …
11th December 2015
Growth in Sub-Saharan Africa’s two largest economies (Nigeria and South Africa) will remain depressed in 2016 but we expect better performances from the region’s smaller markets. Nigeria’s oil-focused economy has been battered by low crude prices and the …
The surprise removal of Finance Minister Nhlanhla Nene is a very worrying development. Mr. Nene was a rare advocate of fiscal discipline, and his sacking adds to a string of increasingly autocratic decisions by President Jacob Zuma . Further debt …
10th December 2015
Retail sales were surprisingly buoyant in October, but we do not believe that this is sustainable. We expect that South Africa’s economy will continue to perform poorly in 2016. … South Africa: Retail sales cannot support growth …
9th December 2015
Data released this morning showed that South Africa’s current account deficit widened in Q3 as a result of higher domestic spending. … South Africa Current Account …
8th December 2015
The South African Chamber of Commerce and Industry (SACCI) business confidence index retreated to near its historic low in November, providing yet another sign that expectations of an improvement in business conditions are fading. … South Africa Business …
3rd December 2015
South Africa’s November Manufacturing PMI fell to a six year low, and - while there is a possibility that the figure could be revised - we believe that monetary tightening and slow growth have dampened firms’ expectations. … South Africa Manufacturing PMI …
1st December 2015
This Friday South Africa will host the sixth Forum on China-Africa Cooperation (FOCAC), a triannual summit jointly convened by China and the Africa Union. The forum will be Africa’s highest-profile diplomatic meet-up this year, and is being presented as …
30th November 2015
It’s been a bad month for Nigerian markets as local stocks have declined further, reaching their lowest level since February. The latest leg down appears to have been triggered by the central bank’s decision to cut interest rates, despite strains in the …
27th November 2015
The Central Bank of Nigeria cut its key policy rate in a surprise move today, the latest signal that Governor Emefiele sees slow growth, rather than the slow-burning balance of payments crisis, as Nigeria’s key economic challenge. The Bank’s …
24th November 2015
South Africa narrowly avoided a technical recession in Q3, but this will provide little comfort for an economy were anaemic growth is becoming entrenched as the new normal. Growth for the year as a whole will probably fall below our once-bearish …
Oft-repeated claims that an African “middle class” will propel economic growth in the region confuse cause and effect. Most estimates of the size of the region’s middle class rely on poorly drawn definitions, and we believe that this vague term obscures …
23rd November 2015
