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Sentiment towards Nigeria has soured following news that presidential elections scheduled for earlier this month will be postponed until 28th March due to security concerns. We expect that the naira will continue to weaken in the run-up to the vote. … …
24th February 2015
South Africa’s economy grew at its strongest pace in a year Q4, but this was largely a result of a temporary rebound following weakness in previous quarters, and so is unlikely to be sustained. Nevertheless, we think that the economy is likely to perform …
The latest official activity data suggest that South Africa’s economy ended 2014 on a high. While the strong quarterly expansion in Q4 is unlikely to be sustained, the economy still looks set to perform better in 2015 as a whole than it did last year. … …
19th February 2015
The prospects for Nigeria’s exports are bleak. The country’s oil exports are suffering not just from lower prices but also from an apparent structural decline in demand. What’s more, despite the recent weakness of the naira, exports from the non-oil …
12th February 2015
December’s rise in South African manufacturing production showed that the sector ended the year on a high. There are also signs that manufacturers started this year fairly strongly. Although growth is unlikely to take off, the sector is likely to perform …
10th February 2015
The decision to delay Nigeria’s general election by six weeks has cast the spotlight back onto Nigeria’s weak institutions. While there have been some improvements over the past few years, much more is needed if the economy is to grow quickly over the …
9th February 2015
Next week’s general election in Nigeria looks likely to be the most closely contested since the country returned to democracy in 1999. The waning in President Goodluck Jonathan’s popularity since he was elected in 2011 is unsurprising, given that the …
6th February 2015
The issuance of over USD18bn worth of US dollar denominated debt by Sub-Saharan African (SSA) states has raised concerns about the region’s rising level of indebtedness, but we believe that most of these fears are largely misplaced. Overall debt levels in …
5th February 2015
January’s PMI figure of 54.2 was the strongest in 16 months, and points to manufacturing growth of about 5% y/y. Nonetheless, Kagiso , which publishes the data, acknowledged that issues with the seasonal adjustment process may have distorted the figure …
2nd February 2015
The surprisingly large improvement in South Africa’s trade balance in December underlines the degree to which the country is benefiting from lower oil prices. This should ease pressure on the rand, and it supports our view that the South African Reserve …
30th January 2015
Policymakers in South Africa kept interest rates on hold today, but struck a significantly less hawkish tone in the accompanying statement. Accordingly, we no longer expect rates to be raised this year, and expect only modest hikes in 2016. … Kganyago …
29th January 2015
The Nigerian naira has remained under pressure over the past month and we expect that it will fall further as foreign reserves dwindle and the currency continues to adjust to lower oil prices. We have revised down our end-year forecast to 210/$, a 9% fall …
27th January 2015
There are encouraging signs that South Africa’s power shortages will ease in the medium term. But this year, they are likely to continue to drag on economic growth. … Electricity shortages to stymie South Africa’s …
26th January 2015
The dramatic fall in oil prices pushed inflation down in much of Sub-Saharan Africa at the end of last year, and it is likely to slow further this year. This would lead policymakers in some of the region’s major economies to postpone policy tightening. …
23rd January 2015
The sharp slowdown in South African inflation, to 5.3% y/y, in December was driven almost entirely by the impact of lower oil prices on petrol inflation. Core price pressures remain strong. But with the headline inflation rate now comfortably within the …
21st January 2015
The upcoming general election may have influenced the Central Bank of Nigeria’s (CBN’s) decision to leave interest rates unchanged today. We suspect that once the election is out of the way, monetary policy will need to tighten in order to reduce …
20th January 2015
GDP growth in South Africa seems to have picked up in Q4 2014, but this acceleration is unlikely to last into 2015. Growth was flattered by base effects and we expect that lasting structural constraints will keep economic expansion low in 2015 and 2016. … …
The dramatic fall in oil prices since last summer will take a significant chunk out of the Nigerian government’s tax receipts, but we do not think it will be disastrous. Although measures to boost non-oil revenues and cut expenditure will drag on growth, …
15th January 2015
Ghana’s GDP growth picked up in Q3, to 5.1% y/y, following a sharp slowdown in Q2. But given the declines in commodity prices, and tight monetary and fiscal policy, we think that the economy will grow at its slowest pace since the 1980s this year. …
14th January 2015
The decline in December’s manufacturing PMI suggests that the sector ended 2014 on a low point. Although it probably contributed strongly to GDP growth over Q4 as a whole, that looks unlikely to be sustained this year. … South Africa Manufacturing PMI …
November’s fall in South African manufacturing production was perhaps overdue given the strength of output in previous months. The sector is still likely to have contributed positively to GDP growth in Q4. … South Africa Manufacturing Production …
12th January 2015
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
