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Kenya’s Monetary Policy Committee hiked its key interest rate by 150bps today, a clear attempt to signal that the bank is serious about curbing high inflation and protecting the rapidly-depreciating shilling. A further hike later this year is possible, …
9th June 2015
Declining tourist numbers pose yet another threat to South Africa’s already beleaguered economy. And the impact of onerous new visa regulations are likely to make the situation even worse. … South Africa: faltering tourism sector deals blow to …
4th June 2015
The recent weakness of the Kenyan shilling is not, as some local media has alleged, the first sign of an impending balance of payments crisis. The shilling will probably continue to depreciate, but pressure should ease as the current account deficit …
3rd June 2015
Growth in oil-rich Gabon is highly dependent on government spending, and low oil prices are causing a painful fiscal crunch that is dampening economic activity. Faltering economic expansion will increase political tensions in the lead up to the 2016 …
2nd June 2015
May’s South African manufacturing PMI reading of 50.8 was a rare piece of positive news for the country, which has seen a run of dispiriting economic figures. Even so, this figure is consistent with a very weak rate of output growth. … South Africa …
1st June 2015
The inauguration of President Muhammadu Buhari this morning was met with widespread optimism in Nigeria, but the 72-year old must act quickly if he is to retain the political momentum and make serious progress in addressing Nigeria’s many economic and …
29th May 2015
Sub-Saharan Africa’s youthful demographic profile is often cited as a potential engine of economic development, but we believe that this argument significantly overstates the economic benefits of rapid population growth. In practice, the structure of most …
27th May 2015
Q1 GDP figures released today showing that economic growth in South Africa plummeted to 1.3% quarter on quarter at a seasonally adjusted annualised rate are very bad news. Several temporary factors ought to have boosted growth in Q1, and the poor outturn …
26th May 2015
South Africa’s rand rallied over the past month, despite a string of weak economic data suggesting that growth is slowing and inflation is picking up. Nigeria’s naira held steady, but yields on the country’s 2021 Eurobond rose by 50bps following news that …
22nd May 2015
The decision by South Africa’s MPC to hold the repo rate at 5.75% was accompanied by a statement that clearly paved the way for rate hikes over the coming months. We have pencilled in a 25bp rate hike at the next meeting, which is scheduled for 23rd …
21st May 2015
Figures released today showed that South Africa’s retail sector faltered in March, supporting our view that GDP growth in the first quarter was a disappointing 2.0% in quarter-on-quarter, seasonally adjusted terms (q/q saar). A variety of structural …
20th May 2015
Inflation in South Africa rose to 4.5% in April, and we expect that it will continue to rise over the coming months. Accelerating inflation will put pressure on the Reserve Bank to raise interest rates, and we expect a hike of 25bps within the coming …
The Nigerian Monetary Policy Committee’s decision to leave its key interest rate at 13% at today’s meeting was not a surprise, but Governor Godwin Emefiele’s comments at the post-meeting press conference seemed notably less hawkish. We expect that around …
19th May 2015
This report is only available as a PDF. Click to download. … South Africa: poor corn harvest poses little inflation risk …
15th May 2015
Q1 GDP figures released today, showing that growth in Nigeria slowed to 4.0% y/y, support our view that the economy will perform poorly in 2015. Growth in both the oil and non-oil sectors was subdued in the first quarter. Weak growth and the stabilisation …
14th May 2015
The Bank of Ghana justified its surprise decision to hike its policy interest rate, from 21% to 22%, today by pointing to elevated inflation, although we think that pressure from the IMF also played a role. While the surprise move makes the Bank’s policy …
13th May 2015
The surprisingly rapid expansion of South Africa’s manufacturing output by 3.8% y/y in March is unlikely to signal a significant turnaround for the embattled sector. We expect that labour disputes and the ongoing power crisis will cause growth to slow …
12th May 2015
Lower oil prices should have reduced Kenya’s wide trade deficit and taken some of the pressure off the struggling Kenyan shilling, but the currency was Sub-Saharan Africa’s worst-performing last month. This seems to be because of the poor performance of …
7th May 2015
Kenya’s Monetary Policy Committee kept its benchmark interest rate unchanged at 8.50% today, but the Committee’s increasingly hawkish tone leads us to believe that rate hikes will come in late 2015 rather than early 2016. We’ve pencilled in 100bps of …
6th May 2015
Falling oil revenue will cause Nigeria’s fiscal deficit to widen in 2015, but we do not expect the shortfall to exceed 2% of GDP. Despite talk of tightening fiscal policy, federal government spending in 2015 will probably exceed the levels seen in 2014. …
5th May 2015
Kenyan inflation rose by a stronger-than-expected 7.1% y/y in April, and we believe that weak food production and the depreciation of the shilling will increase inflationary pressures later in the year, raising the chance of an early rate hike. … Kenya …
30th April 2015
The Angolan government’s attempt to use external borrowing to plug the country’s twin fiscal and current account shortfalls opened by low oil prices is, at best, a temporary measure. This will increase foreign debt without reducing the economy’s …
29th April 2015
New figures from the World Bank confirm that Sub-Saharan Africa’s nascent banking sector is developing along a trajectory not seen in other emerging markets. The rapid expansion of a more inclusive financial sector will provide a boost to growth across …
27th April 2015
Nigeria’s 29th March election was a political triumph; the largely peaceful vote resulted in the country’s first-ever democratic transfer of power between presidents from different political parties. The clear result – Muhammadu Buhari won 54% of …
24th April 2015
This week’s high-profile meeting of African and Asian leaders in Indonesia is unlikely to lead to any concrete measures to boost trade or investment between the two continents. Even so, the crucially important – and frequently misunderstood – economic …
23rd April 2015
South African inflation picked up slightly in March, to 4.0%, but we expect that a combination of energy prices hikes and a weak rand will increase inflationary pressures going forward. Headline inflation is likely to breach 5% by the end of the year, …
22nd April 2015
Nigerian inflation picked up in March, due in large part to the weakness of the naira. While the currency has stabilised in recent weeks, we expect that the effects of its previous sharp depreciation will continue to feed through over the coming months, …
16th April 2015
February’s strong South African retail sales data suggest that the economy’s Q1 slowdown was less severe than we had feared. But even so, we expect that weakness in the mining and manufacturing sectors will keep growth subdued over the course of 2015. …
15th April 2015
The publication of South African Q4 balance of payments data last month grabbed the headlines because of the sharp reduction in the current account deficit, but the worrying rise in banks’ external borrowing went largely unnoticed. In this Watch , we …
14th April 2015
Data released today show that South African mining and manufacturing production was comparatively strong in February, but we believe that these figures provide a misleadingly optimistic view of the economy. Low commodity prices and a lasting electricity …
9th April 2015
The finalisation of Ghana’s three-year, US$918mn loan from the IMF is a very positive development, but we expect slow growth in 2015 and 2016 as the country’s economic unbalances unwind. That said, Ghana’s long-term outlook remains bright. … Ghana: IMF …
7th April 2015
It is difficult to overstate the importance of Nigeria’s recent election, which is setting up Africa’s most populous country and largest economy for its first ever democratic transition of power between two political parties. Even so, we stress that …
2nd April 2015
Last month’s South African manufacturing PMI provides further evidence that the rebound in growth seen at the end of 2014 was temporary and that the economy struggled once again in the first quarter of this year. Indeed, the survey suggests that …
The surprisingly smooth organisation of Nigeria’s 28 th March election has had little effect on the country’s financial markets so far. A violent crisis remains possible, however, if the losing candidate refuses to accept the result, which could spook the …
1st April 2015
Policymakers in South Africa kept interest rates on hold today, but the governor’s statement took a notably more hawkish tone that seemingly paved the way for rate hikes at the next meeting in May. It is worth noting that Governor Lesetja Kganyago has …
26th March 2015
All eyes are focused on Nigeria’s election on 28th March, which will almost certainly spark a brief period of political violence when (as seems likely) the losing candidate refuses to accept the result. And whoever is elected faces the challenging …
Saturday’s election will almost certainly spark a brief period of political violence when (as seems likely) the losing candidate refuses to accept the result. Beyond this, another term for incumbent President Goodluck Jonathan would prolong the current …
25th March 2015
Attention in South Africa has been focused on the impact of US monetary policy, but evidence that the economy has slowed sharply seems to have slipped under the radar. Our GDP Tracker suggests that growth weakened to less than 2% q/q (saar), down from 4% …
19th March 2015
A confluence of domestic and external factors will cut Sub-Saharan Africa’s economic growth in 2015 to its slowest rate this century. Low commodity prices will reduce export earnings and force fiscal policy to tighten. This is likely to lead to a period …
18th March 2015
The fall in South African inflation to a four-year low of 3.9% y/y was driven entirely by a further drop in petrol inflation. But core inflation remained strong and the latest fall in the rand is likely to keep it high. Against this backdrop, while …
The sharp fall in South Africa’s current account deficit in Q4, from 5.8% to 5.1% of GDP, was driven almost entirely by a fall in imports, which reflects lower energy costs. Nonetheless, given the country’s power crisis, this improvement may not be …
17th March 2015
The fall in South African manufacturing and mining output in January supports our view that the rebound in economic growth seen in Q4 was only temporary. We expect GDP growth to return to a more sluggish 2.0% this year. … South Africa Manufacturing …
12th March 2015
On the face of it, Nigeria’s banking system appears to be in good health following a round of recapitalisations in 2011, but its exposure to the oil sector and to naira depreciation mean that additional capital injections may be required in the near …
10th March 2015
South Africa’s energy crisis has grabbed headlines over the past month, with Finance Minister Nlahnlah Nene citing the situation as one factor behind the government decision to cut its 2015 growth forecast from 2.5% to 2.0%. The government is waking up …
9th March 2015
It looks more likely than not that Dr. Haron Sirima will replace Prof. Njuguna Ndung’u as Governor of the Central Bank of Kenya, and his appointment is likely be welcomed by the markets as a safe pair of hands. The bigger picture, though, is that …
6th March 2015
Recent declines in commodity prices will drag on growth in Sub-Saharan Africa this year. What’s more, growth in agriculture and mining during the commodities boom came at the expense of the manufacturing sector – the most reliable source of long-run …
5th March 2015
February’s South African manufacturing PMI figure of 47.6 was the weakest in eight months and, on past form at least, points to a 4% y/y contraction in manufacturing output. Admittedly, the sharp fall compared to January’s strong reading appears to have …
2nd March 2015
The delay to Nigeria’s election and the controversy over the alleged misappropriation of oil revenues have cast the spotlight on the country’s weak governance. After the decision to delay the election was announced on 7th February, the naira came under …
27th February 2015
The Central Bank of Kenya (CBK) kept its benchmark interest rate unchanged at 8.50% today, but we think that currency weakness and the return of inflationary pressures will prompt the bank to raise its key rate by early 2016. … Kenyan interest rates …
26th February 2015
Finance Minister Nhlanhla Nene today presented an annual budget that raised consumption taxes in an effort to limit South Africa’s fiscal deficit, a move that will add to the headwinds facing economic growth. However, the government’s new economic …
25th February 2015
