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Political risk has roiled the markets in South Africa, Nigeria, and Kenya over the past month. Tensions within South Africa’s cabinet, which pose a risk to the country’s already fragile economy, should be of greatest concern to investors. … Africa: …
26th August 2016
South African inflation eased from 6.3% y/y in June to a weaker-than-expected 6.0% in July, but we still think that inflation will pick up again later this year, prompting the Reserve Bank to hike rates by 25bp. … South Africa Consumer Prices …
24th August 2016
This week’s high-profile Japan-Africa summit will not change the fact that Tokyo remains a relatively minor player in Africa. In some areas, however, Japan will continue to play a significant role. … Africa: Japan’s role will remain …
23rd August 2016
After two years of progressively slower growth, most African economies will strengthen in 2017. This recovery will be driven by rising commodity prices, which should ease strains in the balance of payments, and weaker inflation (in most countries). The …
22nd August 2016
The statement accompanying the Hungarian MPC’s meeting earlier today, at which the policy rate was left on hold at 0.90%, gave no sign that monetary easing is on the Council’s agenda. But we think growth and inflation are likely to be lower than the MPC …
17th August 2016
Zambia’s disputed election has raised the risk of a period of political uncertainty, but with the vote out of the way, we think that it’s now likely that the government will agree to a long-delayed IMF bailout. An IMF-imposed fiscal squeeze means that …
June’s manufacturing and mining figures support our view that the South African economy expanded by about 1.5% q/q (saar) in Q2, thus avoiding a technical recession. We still expect that the economy will stagnate over the course of 2016 as a whole. … …
11th August 2016
The sharp fall in Ghanaian inflation supports our view that the worst is over for Ghana’s economy. Thegradual reduction of economic imbalances will help inflation moderate over the coming months. … Ghana: Inflation headed down as economic imbalances …
10th August 2016
Economic growth in Angola is grinding to a halt as the economy adjusts to lower oil prices. Growth will recover in 2017 and 2018, but more gradually than most expect. … Angola: Gradual recovery after a painful …
9th August 2016
The revelation that Mozambique’s government has failed to disclose the true level of its foreign debts has hit sentiment towards the country, which had been seen as an African outperformer. But while the situation is serious, the risk of a full-blown …
5th August 2016
Yesterday’s local elections suggest that South African elections may be becoming more competitive. Foreign investors will probably welcome the fact that reduced support for the ruling ANC has helped the centrist DA rather than the leftist EFF. … South …
4th August 2016
After years of regional outperformance, we expect that Uganda’s economy will slow more sharply than most expect in 2017. Even so, the external vulnerabilities that have built up during the past few years limit the room for looser monetary conditions. … …
3rd August 2016
South Africa’s manufacturing PMI slipped a bit in July, but it still points to manufacturing output growth of about 5.0%. … South Africa Manufacturing PMI …
1st August 2016
Nigeria’s self-proclaimed move to a more “flexible” exchange rate last month was initially a disappointment, with the Central Bank of Nigeria reasserting its grip at N282/US$. Over the last week, however, the bank has belatedly allowed the currency to …
29th July 2016
The Central Bank of Nigeria has loosened its grip on the naira in recent days, causing us to review our forecast. Elsewhere, South Africa’s equities and currency have outperformed. … Africa: Naira finally breaking …
28th July 2016
The Central Bank of Nigeria’s latest rate hike is a belated attempt to regain control over the country’s weakening currency. We expect that the bank will tighten by at least another 200bps later this year. … Nigeria: CBN hikes rates despite threat to …
26th July 2016
The Central Bank of Kenya decided to hold its key rate at 10.50% today, but we expect that the bank will cut rates later this year as inflation remains within target and Kenya’s external vulnerabilities ease. … Kenya: Rates on hold, cuts still in the …
25th July 2016
The weakness of South Africa’s economy prompted the MPC to hold off hiking interest rates today, but we still think there is room for additional monetary tightening later in the year. For now, we think it’s most likely that the MPC will raise its policy …
21st July 2016
Nigeria’s new exchange rate policy falls far short of the authorities’ bold promises and we think the currency will have to fall further over the coming 12 months or so. … Nigeria: currency reforms fall short of high …
Last month’s rise in South African inflation, to 6.3% y/y, took the headline rate further above the Reserve Bank’s target range, and both we and the Bank expect it to edge higher over the rest of this year. Nonetheless, the weakness of the economy, …
20th July 2016
A string of positive trade figures released over the past few months has raised hopes that South Africa’s balance of payments position might finally improve. In this Watch, however, we explain why the country’s large investment income deficit means that …
19th July 2016
Despite the sharp rise in Nigerian inflation last month, we think it will still be some time before the headline rate peaks. This will force the central bank to tighten monetary policy even in the face of a very weak economy. … Nigeria: Rise in inflation …
18th July 2016
Activity data for May suggest that South Africa’s economy has improved after contracting in Q1. We expect that the economy returned to growth in Q2, narrowly missing a technical recession. … South Africa: Economy probably dodged recession in …
14th July 2016
Strong May manufacturing figures add to the evidence that South Africa’s economy avoided a recession in Q2. The sector seems to be benefiting from the weak rand. … South Africa Manufacturing Output …
12th July 2016
South Africa’s business confidence index remained weak in June, though it rose from the all-time low in May. Other surveys – and timely activity data – suggest that the economy probably avoided a technical recession in Q2. … South Africa Business …
6th July 2016
June’s surprisingly positive PMI reading provides another sign that South Africa’s economy narrowly avoided a recession in Q2. … South Africa Manufacturing PMI …
1st July 2016
The key decision affecting African markets this month was Nigeria’s long-awaited currency reforms, which sent the naira tumbling. The effect of Britain’s vote to leave the EU was relatively limited outside of South Africa. … Africa: Naira float, Brexit …
30th June 2016
The surprisingly bad fall in South African GDP in Q1 has raised fears that the economy could enter recession in Q2. We’ll know more in the next few weeks as May’s activity figures are published, but as things stand it’s seems more likely that the economy …
28th June 2016
We expect that African economic growth this year will fall far below even 2015’s very poor result. The weakness will be concentrated in the region’s largest economies, most of which are still adjusting to lower commodity prices. Sharp currency …
23rd June 2016
The weaker-than-expected South African inflation reading for May, of 6.1% y/y, will provide welcome relief for the Reserve Bank. Barring a surprising rise in June’s inflation figure, we think the MPC will pause the tightening cycle at next month’s …
22nd June 2016
Both the Nigerian and South African economies contracted in Q1, and the latest activity figures suggest that things remained very grim going into Q2. In Nigeria, disruptions to oil output in Q2 have dealt a heavy blow to an industry that was already …
16th June 2016
The widening of South Africa’s current account deficit in Q1 will keep pressure on the country’s currency, supporting our view that monetary policy will be tightened. Similarly, higher inflation in Nigeria will prompt rate hikes there. … S. Africa …
14th June 2016
South Africa’s April output figures suggest that, after a disastrous Q1, the economy improved a touch going into Q2. But the country will still struggle to avoid a technical recession. … South Africa: Key sectors improve at start of …
9th June 2016
South Africa’s ailing economy is clearly heading in the wrong direction. Today’s very disappointing Q1 GDP figure will add to pressure on the country’s credit rating. … South Africa: Sharp contraction very worrying …
8th June 2016
The long delay in explaining its new FX policy is another blow to the credibility of the Central Bank of Nigeria. In this note, we examine three key questions raised by the current FX policy uncertainty. … Nigeria: What to look for when CBN clarifies …
3rd June 2016
Today’s trade figures will provide some support for the South African rand. But the currency still faces significant headwinds given political uncertainty and the looming risk of a government credit ratings downgrade. … South Africa: Trade surplus …
31st May 2016
Hints of a devaluation have led to confusion over the direction of Nigerian FX policy. Political uncertainty and fears of a ratings downgrade left South African rand as the worst performing EM currency this month. … Nigeria: Naira ‘reforms’ take centre …
The situation in Nigeria has deteriorated significantly over the past month. The latest national accounts figures show that the economy contracted by 0.4% y/y in Q1, a much worse outcome than had been expected by either us or by the Bloomberg consensus. …
30th May 2016
The fall in global oil prices made an economic slowdown in Nigeria inevitable. But the country’s current crisis is largely self-inflicted. Government policy has made a bad situation much worse. … Nigeria: Analysing President Buhari’s first …
27th May 2016
The Central Bank of Nigeria finally admitted at its MPC meeting today that its inflexible “strong naira” policy has failed. The move towards a more flexible exchange rate system is a positive step. We expect that the naira will weaken to around 240/$, …
24th May 2016
The Central Bank of Kenya’s 100bp rate cut (from 11.50% to 10.50%) signals that the Bank believes that inflation is well-anchored. The wide current account deficit will limit the scope for further cuts. … Kenya: Surprise rate cut sign of reduced …
23rd May 2016
Today’s Q1 GDP figures were far worse than we had expected. It is now likely that Nigeria’s economy will contract over the year as a whole. … Nigeria GDP …
20th May 2016
Today’s decision to hold rates at 7.00% is only a pause in the SARB’s tightening cycle; we still expect at least two rate hikes later this year. The MPC statement supported our very downbeat view of South Africa’s economy. … South Africa: A pause in the …
19th May 2016
Lower-than-expected inflation and retail sales will probably lead the SARB to leave rates on hold at its meeting tomorrow. Output data suggest that South Africa narrowly avoided a fall in GDP in Q1. … South Africa: Weak economy will prompt SARB …
18th May 2016
The sharp fall in Nigeria’s oil production could, if sustained, shave more than 1%-pt off GDP growth this year. Lower oil output will also add to the country’s fiscal and current account problems. … Nigeria: Oil disruptions add to economic …
16th May 2016
The vice president’s comments regarding a possible change to Nigeria’s currency regime suggest that policy elites may not be as opposed to a devaluation as many believe. Claims that Nigeria’s fuel subsidies have been abolished are exaggerated, but price …
12th May 2016
Declining output from the manufacturing and mining sectors underscore the weakness of South Africa’s economy. Given today’s grim figures – and the recent jump in unemployment – we expect that the SARB will postpone its next 25bp interest rate hike from …
GDP growth in Sub-Saharan Africa slowed to a 16-year low in 2015, but the adjustment to low commodity prices is far from over. We expect even weaker growth in 2016. … Africa: Economic shock not over …
10th May 2016
The rise of unemployment to a 12-year high is another grim milestone for South Africa. And with municipal elections coming up in August, today’s data may embolden populist figures hoping to capitalise on the ruling party’s recent missteps. … South …
9th May 2016
Kenya’s high public debt should stabilise as a share of GDP if – as we expect – growth stays strong. But a sharp slowdown or a run on the currency could easily put the debt ratio on an unsustainbale path. … Kenya: Rising debt adds to economic …
6th May 2016
