Filtered by Subscriptions: Africa Economics Use setting Africa Economics
Strike action in South Africa may have knocked as much as half a percentage point off GDP growth over 2014 as a whole. As long as industrial action does not reach a similar scale this year, growth should pick up slightly. But even without labour unrest, …
9th January 2015
Precious metals mining in South Africa is in long-term decline and lower prices are undermining profitability. Although the country’s near-monopoly on global platinum and palladium reserves suggests that output will be maintained, supply disruption at …
8th January 2015
Next month’s general election in Nigeria looks set to be the closest since democracy returned to the country in 1999. There is a clear risk that the outcome leads to a repeat of the violence around the 2011 election, with the potential for substantial …
7th January 2015
Currencies in sub-Saharan Africa have continued to come under pressure this month, with both the South African rand and Nigerian naira falling to record lows. The naira has suffered from the further falls in oil prices, with the central bank’s move last …
17th December 2014
African currencies have struggled again this month, with the South African rand coming under fire due to renewed concerns about the country’s current account deficit. Meanwhile, further falls in oil prices have weighed on the Nigerian naira. We think that …
15th December 2014
Data released over the weekend showed that inflation in Nigeria continued to slow in November. But we expect it to accelerate again before too long as the effect of the naira’s weakness feeds through to domestic prices. All told, we think that inflation …
Growth in Sub-Saharan Africa is likely to slow to its weakest pace since the late 1990s next year. There are several drivers of this weakness, but a common theme is that the global commodities boom has come to an end. Mining countries such as South Africa …
11th December 2014
South Africa’s headline rate of inflation slowed slightly in November. We think that it will fall further in the coming months, but core price pressures are likely to remain strong. As a result, we think that the central bank will tighten policy early …
10th December 2014
Manufacturing output in South Africa continued its steady recovery in October. Lower oil prices and a weaker rand will provide a boost to the sector over the coming months, but underlying growth is likely to remain fairly slow. … South Africa …
9th December 2014
The sharp slide in oil prices will help to lower inflation in South Africa and is likely to make a significant dent in the country’s current account deficit. But while this may ease concerns about the economy’s vulnerabilities, the overall external …
Angola will be one of the hardest hit EMs by the sharp fall in oil prices and we doubt that the authorities will be able to finance the likely current account deficit for more than a couple of years. Accordingly, we expect the currency to weaken, fiscal …
8th December 2014
Despite the fall in oil prices and the weakness of the economy, South Africa’s current account deficit remained large in Q3. If lower oil prices are maintained, as we expect, then the deficit should decline next year. But it is still likely to be quite …
Dramatic falls in oil prices have already taken a heavy toll on Nigeria, where the central bank was forced to devalue the naira and raise interest rates to slow the currency’s decline. As we show in this Watch , a number of other countries look …
2nd December 2014
The latest manufacturing PMI for South Africa suggests that growth in the sector continued to pick up at the beginning of Q4. But strong growth is unlikely to last. … South Africa Manufacturing PMI …
1st December 2014
The large rise in South Africa’s trade deficit in October was largely down to an unusually large increase in oil imports, which is unlikely to be sustained. Nevertheless, the external shortfall will remain worryingly large. … South Africa Trade …
28th November 2014
The slump in the Nigerian naira this month forced the central bank to take drastic action. Interest rates were hiked for the first time in three years and the currency was devalued. But given that the currencies of other oil producing countries have …
The Central Bank of Nigeria raised interest rates and devalued the naira in order to reduce the pressure on the currency and stem the depletion of its foreign exchange reserves. But we suspect that additional tightening will be necessary in order to …
25th November 2014
The modest pick-up in South African GDP growth in Q3 reinforces the picture that the economy is struggling to recover from a strike-induced slowdown in the first half of the year. Meanwhile, upwards revisions to the level of GDP will result in a modest …
We think that the Central Bank of Nigeria will respond to the recent slump in the naira by raising interest rates tomorrow. Our best guess is that interest rates will rise from 12.00% to 13.50%, but there is certainly scope for an even bigger hike. … …
24th November 2014
The Reserve Bank of South Africa left interest rates on hold at 5.75% today, but Governor Kganyago made it fairly clear that he expects monetary policy to tighten next year. A sluggish domestic economy and the likelihood that inflation will continue to …
20th November 2014
A number of African currencies have struggled this month, with the Nigerian naira hit hardest as the central bank has scaled back its FX intervention dramatically. Nigeria’s bonds have also sold off and its local equity market has underperformed the rest …
19th November 2014
Inflation in South Africa remained close to the upper limit of the central bank’s target in October. Although recent declines in commodity prices will put some further downward pressure on inflation in the near term, we think that the central bank will …
Earlier today, the Bank of Ghana raised its headline policy rate from 19% to 21% – the highest level since January 2004. As it happens, the move was more presentational than practical and is unlikely to have a major impact on market rates. Nevertheless, …
12th November 2014
The jump in the annual growth rate of manufacturing production in September paints a false impression of the sector’s strength. In quarterly terms, output actually contracted in Q3 as a whole. … South Africa Manufacturing Production …
11th November 2014
South Africa’s Medium Term Budget (MTB), announced last month, received a mixed reception. Government bond yields fell slightly on the day it was announced. But last week, Moody’s downgraded South Africa’s credit rating from Baa1 to Baa2, citing concerns …
10th November 2014
The sharp fall in the Nigerian naira today probably reflects reduced intervention by the central bank, and increases the probability that policymakers will raise interest rates later this month. We have pencilled in a 50 basis point hike that would take …
6th November 2014
The Central Bank of Kenya (CBK) kept its benchmark interest rate unchanged at 8.50% today, but we think that a pick-up in inflation and concerns about Kenya’s large current account deficit will prompt the CBK to raise interest rates over the next 6-12 …
4th November 2014
October’s manufacturing PMI gave some encouraging evidence that South Africa’smanufacturers are bouncing back from the weakness earlier in the year. But we doubtthat the sector is about to embark on a sustained period of strong growth. … South Africa …
3rd November 2014
The latest data show a general slowdown in inflation across Sub-Saharan Africa. A variety of factors contributed to this easing, including lower commodity prices and the unwinding of the impact of previous currency falls. But while we think this might …
30th October 2014
Concerns about the strength of the global economy, alongside a number of other factors, have weighed on Africa’s financial markets over the past month. Amid the gloom, South Africa’s markets have been among the stronger performers in SSA and emerging …
27th October 2014
Recent movements in commodity prices are unlikely to be enough to lower inflation in South Africa substantially. Indeed, exchange rate weakness and upcoming energy price hikes will put further upward pressure on inflation. As a result, we still think that …
23rd October 2014
Today’s medium-term budget statement provided some encouraging signs that the government is finally willing to implement fiscal consolidation measures in order to prevent the public finances from deteriorating further. But whether these plans will be …
22nd October 2014
While Ghana’s authorities continue discussions with the IMF about a possible programme, the macroeconomic situation in the country appears to be getting worse. We suspect that the eventual tightening of fiscal and monetary policy as a part of any deal …
21st October 2014
Our South Africa GDP Tracker suggests that economic growth picked up slightly in Q3, but was still very weak. As a result, there is a significant chance that GDP growth in 2014 as a whole undershoots our forecast of 1.5%. What’s more, we suspect that the …
16th October 2014
Kenya’s GDP growth accelerated in Q2 and this strength appears to have continued in Q3. But rising political risks and the prospect of tighter monetary policy are likely to prevent the economy from gathering much more pace in coming quarters. … Kenya’s …
13th October 2014
The South African Reserve Bank is set to hike interest rates over the coming months to shore up the currency and counter above-target inflation, but this will hit household spending. Based on a few assumptions, we think our forecast for a 125bp increase …
9th October 2014
African currencies have not been immune to the recent sell-off in EM financial markets, raising concern in some countries about rising inflation. In this Watch , we examine which economies are likely to be hit hardest by this currency weakness, and how …
7th October 2014
Stronger trade and investment links mean that Sub-Saharan Africa’s economy as a whole is more exposed to China’s than ever before. We forecast China’s economic growth to slow over the next few years, which would drag on growth in Sub-Saharan Africa. Among …
3rd October 2014
The pick-up in South Africa’s manufacturing PMI in September provides further evidence that the sector has come out of its recent slump. But even so, activity remains extremely weak and the prospects for the sector over the coming years look poor. … SA …
1st October 2014
The South African rand has come under pressure this month as renewed attention on monetary tightening in the US has put the country’s large current account deficit back into the spotlight. The latest financial market moves will make the job of the …
29th September 2014
Ghana’s markets have rallied in response to the news that the government has turned to the IMF for support, with the currency strengthening and the yields of dollar-denominated bonds falling this month. Elsewhere though, currencies have sold off, with the …
26th September 2014
Speculation is mounting that one of the current Deputy Governors will take over from Gill Marcus as Governor of the South African Reserve Bank. But the bigger picture is that, whoever is appointed, South Africa’s inflation problem and large current …
23rd September 2014
The weakness of Nigeria’s export sector is down to a variety of factors, including a lack of competitiveness, falling oil prices and the expansion of shale oil extraction in the US. These factors point to continued sluggish export growth over the next few …
22nd September 2014
The Central Bank of Nigeria (CBN) kept interest rates on hold today and we do not expect any major shifts in the stance of monetary policy in the near term. The risks to inflation are skewed to the upside, but the CBN is unlikely to tighten policy given …
19th September 2014
The decision by the South African Reserve Bank to leave interest rates unchanged at 5.75% today was overshadowed by the announcement that Governor Marcus will step down in November. Whoever assumes her role will inherit a tricky balancing act, facing weak …
18th September 2014
The Ghanaian authorities’ turn to the IMF and the subsequent rally in the cedi allowed the central bank to keep interest rates on hold today, in spite of above target inflation. Looking ahead, we think inflation will rise further over the coming months, …
17th September 2014
The Reserve Bank’s (SARB’s) recent bailout of African Bank has raised concerns over the state of South Africa’s wider financial sector. But as we explain in this Watch, although other smaller banks that follow the same business model as African Bank could …
10th September 2014
South Africa’s balance of payments data for Q2 make for grim reading. The current account deficit widened to its largest as a share of GDP since Q3 2013 and, while exports are likely to pick up later this year as mining production comes back online, …
9th September 2014
We think that the risks from the recent glut of foreign currency bond issuances by African governments are, for the most part, manageable. Granted, both Ghana and Zambia have turned to the IMF recently for support. But in general, we do not expect foreign …
8th September 2014
