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Concerns over the impact on sub-Saharan Africa (SSA) of a further slowdown in China have resurfaced over the past couple of weeks. While we do not expect China to experience a hard landing, we do think that growth there will continue to weaken over the …
28th March 2014
Following its surprise hike in January, the recent rally in the rand enabled the South African Reserve Bank (SARB) to keep interest rates on hold today. But the bigger picture is that, with South Africa still among the most vulnerable EMs to a slowdown in …
27th March 2014
In its first MPC meeting since the suspension of Governor Lamido Sanusi, the Central Bank of Nigeria (CBN) kept interest rates on hold at 12.00% today. The case for conventional tightening is building, but we suspect that, given the proximity of national …
25th March 2014
The Zambian kwacha has become the latest African currency to come under fire, and has this month slumped to an all-time low against the US$. This follows similar falls in the Ghanaian cedi and Nigerian naira earlier in the year. The gradual tightening of …
20th March 2014
Clouds have gathered over the outlook for sub-Saharan Africa (SSA) over the past few months due to growing concerns over widening twin budget and current account deficits and the effects of a slowdown in China. But while vulnerabilities are mounting at an …
19th March 2014
The proposed rebasing and revision of historical Nigerian GDP data, due to be released at the end of this month, are likely to show that the country has overtaken South Africa as the region’s largest economy. What’s more, a higher rate of trend growth …
14th March 2014
South Africa’s current account deficit fell to close to a two-year low in the final quarter of last year. But while on paper this appears to be good news, a deeper look reveals that it was driven primarily by a fall in imports, rather than a rise in …
12th March 2014
Sub-Saharan Africa (SSA) grew at its second slowest pace since 2000 last year and, though we expect a modest acceleration this year, growth is likely to remain below the rates seen over the past decade. With global monetary conditions set to tighten over …
6th March 2014
The Central Bank of Kenya (CBK) was able to keep interest rates on hold today as the shilling has remained stable despite the recent turmoil in EM currency markets. But a large current account deficit that is being funded by short-term inflows of capital …
4th March 2014
The latest PMI survey for South Africa suggests that, having rebounded in Q4, growth in the manufacturing sector has stabilised in the current quarter. But while this provides grounds for some optimism, there are still a number of challenges facing local …
3rd March 2014
The turmoil in EM financial markets over the past six months has spread to a number of economies in sub-Saharan Africa (SSA), taking some of the gloss off the region’s upbeat growth story in the process. The realisation that global monetary conditions are …
27th February 2014
South Africa’s Finance Minister Pravin Gordhan announced new projections for smaller fiscal deficits over the coming years in today’s budget statement, but we think that these are unlikely to be met. The bond market also appears to be unconvinced, as …
26th February 2014
Despite the acceleration in Q4, the South African economy grew at its second slowest pace in 15 years in 2013. Looking ahead, a number of domestic and external constraints suggest that growth will remain lacklustre in 2014 and 2015. To compound matters, a …
25th February 2014
The recent turbulence in EM currency markets has spread to some of Africa’s major economies, with the Ghanaian cedi and Nigerian naira slumping to all-time lows against the US$ this month. The South African rand has also been hit hard. Looking ahead, a …
21st February 2014
Signs that the recent turbulence in EM markets is spreading to sub-Saharan Africa (SSA) have caused some to question the region’s upbeat growth story. But while some vulnerabilities are building and a few countries may now be entering a period of weaker …
20th February 2014
South African inflation rose in January and the effects of a weak rand means it is likely to accelerate above the upper bound of the Reserve Bank’s 3-6% target range again. This is likely to spur the SARB into more action following its surprise rate hike …
19th February 2014
Our GDP Tracker suggests that the South African economy picked up pace in the final quarter of last year. Nevertheless, full-year growth for 2013 is likely to have been the second worst outturn in 15 years and, looking ahead, the outlook for 2014 and 2015 …
13th February 2014
Zambia’s fiscal position has deteriorated markedly over the past few years despite the tailwind of high copper prices, which have boosted revenues. A relatively low burden of public debt means that a full blown fiscal crisis is not imminent but, …
12th February 2014
On the face of it, the fall in South Africa’s unemployment rate to a two-year low in Q4 is encouraging, but much of this can be explained by a rise in temporary employment in sectors that deliver low rates of productivity growth. Looking ahead, …
11th February 2014
The decision by the Bank of Ghana to aggressively hike rates today, combined with the FX restrictions announced yesterday, should bring some temporary relief to the cedi. However, a lack of progress in tackling the country’s enormous twin budget and …
6th February 2014
Following the South African Reserve Bank’s decision to hike interest rates last week in response to the recent turmoil in EM financial markets, Ghana looks set to be the next country in the region to tighten monetary policy, having brought forward its …
4th February 2014
South Africa’s latest manufacturing PMI suggests that the sector has started 2014 on a subdued note. The continued depreciation of the rand should eventually provide a boost for local industry over the coming months, but there are still a number of …
3rd February 2014
The South African Reserve Bank responded to the turmoil in EM currency markets by unexpectedly hiking interest rates this month. Rates were raised by 50bp to 5.50% and, looking ahead, we think policy is now likely to be tightened further over the coming …
31st January 2014
The dust is still settling on the SARB’s unexpected decision to hike interest rates yesterday, with the rand strengthening slightly against the US$ so far today. Nevertheless, the currency is still weaker now than it was prior to yesterday’s surprise …
30th January 2014
The South African Reserve Bank became the latest EM central bank to respond to the turmoil in currency markets by hiking interest rates today. However, if the decision to tighten was aimed at shoring up the rand, it failed to have the desired effect – at …
29th January 2014
The latest outbreak of strikes has cast a spotlight back on the problems in South Africa’s mining sector. Although it is difficult to predict how events will pan out from here, the disruption of platinum production is likely to weigh on GDP growth in Q1. …
27th January 2014
The South African rand has slumped to a five-year low over the past couple of days – in the process breaking through our end-year forecast of 11/$, which itself had been at the bottom end of consensus expectations only a few months ago. The rand has now …
24th January 2014
The Central Bank of Nigeria kept interest rates on hold today but, significantly, Governor Lamido Sanusi struck a notably more hawkish tone than has previously been the case in the accompanying press conference. In particular, he raised the possibility of …
21st January 2014
The key political event in sub-Saharan Africa this year is the elections for the presidency and national assembly in South Africa. Although it seems likely that Jacob Zuma will be re-elected as president and the ruling ANC party will retain power in the …
16th January 2014
The fall in South Africa’s latest manufacturing PMI reading suggests that the sector ended 2013 on a soft note. Looking ahead, a gradual improvement in growth in the euro-zone should provide a boost to local manufacturers, but there are still a number of …
15th January 2014
The Central Bank of Kenya (CBK) kept interest rates on hold today and, with inflation likely to ease over the coming months, there is no immediate pressure to tighten policy. But a large current account deficit that is being funded by short-term inflows …
14th January 2014
Inflation across sub-Saharan Africa is likely to remain broadly stable in 2014. Admittedly, the region is more susceptible than other EM regions to food price shocks related to drought. But in the absence of this, inflation is likely to remain at similar …
9th January 2014
The South African economy grew at its second-slowest pace in 15 years in 2013. Growth should accelerate this year but, by the same token, a significant turnaround in performance seems unlikely. We are forecasting full-year growth of 2.3% in 2014, from an …
8th January 2014
Financial markets in Africa appear to have taken yesterday's decision by the US Fed to taper its monthly asset purchases under QE3 in their stride. Of the region's major economies, Kenyan and Nigerian stocks have been broadly flat, while South Africa's …
19th December 2013
Concerns have been raised about the impact of less accommodative global monetary policy on capital flows to sub-Saharan Africa (SSA), but one factor that often gets overlooked is that of overseas remittances. In this Watch, we argue that remittance flows …
17th December 2013
The key development in African financial markets over the course of 2013 has been the slump in the South African rand, which has depreciated by more than 20% against the US dollar. But while most of the adjustment may have now taken place, there are a …
12th December 2013
Sub-Saharan Africa's (SSA's) consumer market has quadrupled in size since 2000, and is now worth over US$650bn. While some of the tailwinds that have supported consumption over the past decade are likely to ease over the coming years, we think the boom is …
11th December 2013
Nelson Mandela’s role in the political development of South Africa is unquestionable, but significant economic progress was also made under his leadership. However, this is now in danger of being undone. … Nelson Mandela’s economic …
6th December 2013
A sizeable current account surplus means that capital outflows from Nigeria are not a cause for concern at the moment. However, a sustained fall in oil prices, as well as the appointment of a more dovish Central Bank Governor next year, are two key risks …
4th December 2013
South Africa’s current account deficit widened to its largest level since 2008 in Q3. What’s more, the shortfall continues to be funded in large part by short-term capital inflows. As such, the economy remains among the most vulnerable emerging markets to …
3rd December 2013
Following the sharp contraction in South African manufacturing in Q3, the latest PMI reading suggests that the sector may have staged a rebound so far in Q4. Nevertheless, a number of domestic structural challenges mean that this is unlikely to signal the …
2nd December 2013
Interest rates were kept on hold in South Africa, Nigeria, Kenya and Ghana this month, but the more interesting aspect of the announcements was the notably hawkish tone struck by policymakers. In South Africa, rate hikes were discussed by the MPC, despite …
28th November 2013
The Central Bank of Ghana kept interest rates on hold today, but the tepid pace of fiscal consolidation and a weakening currency mean that monetary policy is likely to be tightened over the coming months. We expect 100bp of hikes, bringing the benchmark …
27th November 2013
The South African economy slumped in Q3 to record its slowest quarterly pace of growth since 2009, and the outlook for the coming quarters remains lacklustre. To compound matters, the weakness of the rand means that monetary policy may even need to be …
26th November 2013
African currencies have remained broadly stable over the past month or so but, looking ahead, the general trend is likely to be one of weakness against the US dollar over the next year. In particular, it is the Nigerian naira that could be set for the …
25th November 2013
The South African Reserve Bank (SARB) left rates on hold today but gave its clearest indication yet that the next move in interest rates will be up. The renewed slump in economic growth means that the SARB will be reluctant to raise rates for the time …
21st November 2013
It is fitting that Nigeria’s Budget Proposal for 2014 has been delayed again on a day where the Central Bank has voiced its concerns over fiscal slippage. Low inflation means the Central Bank has breathing room for the time being, but we think that …
19th November 2013
The pick-up in Nigerian GDP growth in Q3 was driven by an improvement in the non-oil sector, which has been due in part to continued loose fiscal policy. All of this would seem to strengthen the case for higher interest rates. But the drop in inflation to …
18th November 2013
The South African rand rallied yesterday following revisions to the methodology used to compile monthly trade data that resulted in a significant fall in the trade deficit. But the rebound has proved short-lived and, looking ahead, the currency is likely …
15th November 2013
A boom in oil production should ensure that economic growth in Angola remains strong over the next couple of years. But history suggests that it is difficult to sustain strong energy-led growth over a longer period, meaning Angola could struggle to …
13th November 2013
