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Over the past month central banks in South Africa, Ghana, Zambia, and Mozambique have all hiked interest rates. These countries’ domestic situations all vary, but each is facing a combination of high inflation and a weakening currency. The Ghanaian cedi …
20th November 2015
The SARB’s decision to hike its key interest rate from 6.00% to 6.25% showed that the Bank is alarmed at the prospect of persistently high inflation in the context of disappointing growth. The prospect of impending Fed tightening will have also played a …
19th November 2015
September’s retail sales figures were weaker than expected, supporting our belief that recent strong growth in the consumer sector is unsustainable. But today’s figures do at least suggest that the economy returned to growth in Q3, avoiding a technical …
18th November 2015
South African inflation accelerated to 4.7% y/y in October in what we believe is the beginning of a sharp inflationary spike. While tomorrow’s rate decision will be close, we expect that the SARB will hike interest rates by 25bp. … South Africa Consumer …
GDP figures for Q3 support our long-held view that Nigeria’s 2015 economic performance will be far worse than is commonly expected. Growth in Sub-Saharan Africa’s largest economy was just 2.8% in Q3, only a touch above the disastrous 2.4% reported in Q2. …
17th November 2015
While the Central Bank of Kenya held its key interest rate at 11.50% today, we expect that the Bank will be forced to raise rates by 100bp in early 2016 as inflation picks up and Fed tightening puts pressure on the shilling. … Kenya: CBK holds rates, hike …
The Bank of Ghana’s surprise interest rate hike reflects fears that above-target inflation is becoming entrenched. Tight monetary policy will be painful, but the Bank provided the first hint that rates may be cut next year if inflation falls back. We …
16th November 2015
The pledge to cut Ghana’s fiscal deficit by 2.0%-pts of GDP next year will be welcomed by investors, but may prove difficult to achieve in the context of slow growth in the commodity-dependent economy. … Ghana: 2016 budget targets will prove difficult to …
13th November 2015
Investors are likely to welcome the long-delayed appointment of a federal cabinet in Nigeria. But the newly-appointed ministers face an up-hill battle to revive the economy, and it isn’t clear how much influence the new appointees will have. … Nigeria: …
11th November 2015
Today’s manufacturing output figures were sharply above consensus, and show that the economically crucial sector returned to growth in September. This is a welcome sign, and supports our view that the SARB will hike rates next week. … South Africa …
10th November 2015
The Bank of Zambia’s decision to hike rates by 300bps was a predictable response to last month’s inflation surge. And with the currency likely to remain under pressure, further hikes remain possible. … Zambia: Currency crisis prompts sharp rate …
3rd November 2015
The sharp fall in South Africa’s October manufacturing PMI supports our view that the country’s manufacturing sector will struggle over the coming months. … South Africa Manufacturing PMI …
2nd November 2015
Despite the steep fall in oil prices and a very weak economic growth, we expect that Nigeria’s budget deficit will remain relatively contained in 2015 and 2016. As we explain in this Watch , however, this is largely the result of a government shutdown …
29th October 2015
The high yield of Ghana’s new eurobond provides yet more evidence that market sentiment towards African dollar debt has turned. Equity and currency markets, meanwhile, performed poorly across the region, with the notable exception of South Africa. … …
28th October 2015
Peaceful elections held earlier this month in Cote d’Ivoire and Tanzania were welcome signs of improving institutions in both countries. While final results haven’t been announced yet, the fact that Cote d’Ivoire’s vote passed peacefully is a particularly …
27th October 2015
The South African government’s newly-revised macroeconomic forecasts announced in today’s medium-term budget policy statement seem more plausible than those in February’s budget. Even so, the expectation that the public debt-to-GDP ratio will stabilise …
21st October 2015
Last month’s weaker-than-expected South African inflation reading, of 4.6% y/y, coming alongside the recent rally in the rand, makes next month’s Reserve Bank rate decision a close call. But with inflation set to rise above the Reserve Bank’s target range …
The Bank of Uganda’s decision to hike its policy interest rate by a further 100bp, to 17.0%, today appears to be a response to the sharp pick-up in inflation in September. The bulk of the monetary tightening cycle has probably now happened, but with …
20th October 2015
Data released today showed that Nigerian inflation continued its slow grind higher last month, reaching 9.4% y/y, its strongest rate in over two years. Given the previous slide in the naira and the potential shortages created by restrictions on access to …
14th October 2015
Manufacturing and mining output figures for South Africa released today were both weaker than the figures reported last month. The downbeat data support our view that growth will remain weak over the remainder of 2015. … South Africa Mining & …
8th October 2015
The latest Mo Ibrahim Index reports that progress on improving governance in Sub-Saharan Africa is stalling at a regional level. Some states, however, have continued to make progress – including many of the continent’s largest economies. … Africa: …
6th October 2015
The response of Nigerian policymakers to falling oil prices has only worsened their country’s economic slump. Africa’s largest economy is now on the cusp of a self-induced economic crisis. … Nigeria: Bungled policy response plunges economy into …
5th October 2015
The second consecutive below-50 PMI reading provides more evidence that the strong manufacturing output figures reported for July were a blip and that the sector remains mired in slow growth. … South Africa Manufacturing PMI …
1st October 2015
The Kenyan economy received two pieces of good news today, with figures showing that inflation remained stable in September and economic growth picked up in Q2. We believe that the country, a net commodity importer, will be a key regional outperformer in …
30th September 2015
Speculation regarding a sharp economic slowdown in China has raised worries about the impact on African economies. We believe that these fears are overdone, for three key reasons. First, the prospects for growth in China remain much more positive than is …
African financial markets mostly performed poorly over the past month due to a combination of foreign shocks and botched domestic policy responses. We are increasingly worried about the risk of an economic and financial crisis in Nigeria. … Global …
28th September 2015
The past month has seen a raft of very bad news from key African economies. New government figures show that growth slowed in Q2 in Ghana and that South Africa’s economy actually contracted. Forward-looking indicators in Uganda continued to slide as a …
Worries about slowing growth in China and tightening monetary policy in America have dented some of the optimism surrounding African economies. But the consensus is still far too bullish about the continent’s prospects over the short term. We see growth …
24th September 2015
A string of grim growth figures led South Africa’s MPC to pause its gradual tightening cycle today. We had expected a hike at this meeting, and still think that accelerating inflation and a depreciating rand will force the committee to hike rates by 25bp …
23rd September 2015
Inflation in South Africa fell to 4.6% y/y in August, below our expectations and those of other analysts. We still expect the SARB to hike interest rates later today, but today’s CPI figure means that there is a growing chance that it will leave rates …
The Central Bank of Nigeria kept its key interest rate on hold today, while its embattled governor reiterated his support for controversial FX policies in the face of growing criticism. An overdue cut to the reserve requirement will, at least, provide …
22nd September 2015
The creation of a Treasury Single Account for Nigeria’s federal government is a sensible step, but poor implementation has sparked an entirely avoidable liquidity freeze. While the Central Bank has the ability to contain the situation, the fumbled reform …
17th September 2015
Statistics South Africa has updated its calculations of retail sales figures, but the new data still paint a pretty miserable picture. Our GDP tracker suggests that the South African economy stagnated in July, raising the real risk of a recession in Q3. … …
16th September 2015
Data released this morning showed that South Africa’s current account deficit narrowed to 3.1% of GDP in Q2. While this is welcome news, a more detailed look at the figures highlight the economy’s serious structural problems. … South Africa Current …
15th September 2015
The surprise 100bp rate hike, to 25.0%, by the Bank of Ghana today appears to have been aimed at shoring up the cedi, particularly in light of the US FOMC meeting later this week. We expect monetary conditions in Ghana to remain tight for the foreseeable …
14th September 2015
Planned mine closures will deal a heavy blow to Zambia’s copper-dependent economy. But the country’s economic problems run deeper than the current fall in copper prices. We expect that the country faces a very difficult few years. … Zambia: Problems under …
11th September 2015
Manufacturing and mining output figures for South Africa released today were both above consensus, but both figures were distorted by the comparison with last year’s disruptions. Underlying growth in the economy remains weak. … South Africa Mining & …
10th September 2015
The expulsion of Nigeria from JPMorgan’s GBI-EM bond index will have little practical impact on Africa’s largest economy. But the move is an embarrassing blow to the Nigerian government’s economic reputation, and will add to calls for the naira to be …
9th September 2015
A combination of low commodity prices and domestic weaknesses will drag growth in Sub-Saharan Africa down to around 3.3% this year, a very grim figure for a region often touted as the “next China”. … Africa’s much-touted “rise” stalls in …
7th September 2015
On the face of it, Nigeria’s restrictions on access to foreign currency have been quite successful at stabilising the naira and the central bank’s foreign exchange reserves. However, the adverse economic impact of these restrictions is becoming more and …
3rd September 2015
The fall in South Africa’s manufacturing PMI last month provides yet further evidence of economic weakness. Perhaps the best that can be said is that the manufacturing sector’s performance so far in Q3 doesn’t seem to be quite as bad as it was in Q2. … …
1st September 2015
African financial markets performed poorly over the past month due to acombination of domestic economic problems and deteriorating investor sentimenttowards emerging markets on the back of worries about China’s economy. … China, domestic woes weigh on …
28th August 2015
Yesterday’s Nigerian GDP figures showed that the country’s economy slowed even more sharply than weexpected in the second quarter. While low oil prices have battered the economy, the recent figures pointto a slowdown caused more by structural weaknesses …
26th August 2015
The sharp drop in South African GDP in Q2 was the second worst outturn since the depths of the global financial crisis. Today’s data may prompt the Reserve Bank’s MPC to think twice before next month’s rate-setting meeting, but given the latest sell-off …
25th August 2015
Nigeria’s economy has struggled this year, with the most obvious cause being the recent collapse of global oil prices. But this isn’t the only obstacle to faster growth in Sub-Saharan Africa’s largest economy; many structural factors are weighing on the …
24th August 2015
Inflation in South Africa ticked up to 5.0% in July, and we expect that it will continue to rise over the coming months. Accelerating inflation and a weak rand mean that the Reserve Bank is likely to raise the repo rate from 6.00% to 6.25% next month. … …
19th August 2015
Many African central banks are running down scarce foreign exchange reserves in a doomed effort to defend overvalued currencies from painful adjustments. But with commodity prices likely to remain weak and US monetary policy set to tighten, the use of …
17th August 2015
Today’s figures show that Nigerian inflation remained at 9.2% y/y in July, but we still expect that inflation will pick up later in the year. FX restrictions and the eventual weakening of the naira will push up import prices over the coming months. … …
12th August 2015
Today’s manufacturing output figures were slightly above consensus, but still point to a contraction in the economically-crucial sector. Firms have failed to benefit from a weaker rand, another sign of South Africa’s crippling competitiveness problems. … …
11th August 2015
The Bank of Uganda’s decision to hike interest rates by another 150bp today was an effort to support the flagging currency. The hike is yet another example of Sub-Saharan Africa’s escalating tightening cycle. … Ugandan rate hike adds to African tightening …
10th August 2015
