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Financial markets in Africa have taken a hit over the past month following signals from the US Fed that it intends to taper its asset purchases under QE3. Nevertheless, we think that the economic impact of the Fed’s tapering – and eventual tightening of …
28th June 2013
Signals from the US Fed that it intends to scale back its asset-purchasing programme later this year have had a notable impact on most sub-Saharan African markets over the past month. But while the best days for the region’s bond markets may now be over, …
25th June 2013
Monetary policy in sub-Saharan Africa has all of a sudden become interesting. Ghana surprised expectations by hiking interest rates last month, while countries in East Africa have continued to cut rates. And this has all taken place against a backdrop of …
24th June 2013
South Africa’s current account deficit narrowed slightly in Q1, helping to ease some of the near-term pressure on the rand. But the fact that the deficit is being funded in large part by short-term inflows of capital means that external financing risks …
19th June 2013
Almost five years after a domestic banking crisis, there are encouraging signs that Nigeria’s financial sector is slowly returning to health. But while there are reasons to be optimistic, some key challenges still remain, most notably diversifying banks’ …
18th June 2013
Technical difficulties mean that the proposed rebasing and revision of Nigerian GDP data have now been delayed until 2014. Nevertheless, whenever the revised data are released, they are likely to show that the country has overtaken South Africa as the …
12th June 2013
Around half of the fall in the rand over the past month or so appears to have been due to global factors, while the other half has possibly been due to domestic factors such as labour unrest. With these problems unlikely to abate any time soon, we expect …
11th June 2013
Today’s decision from the Bank of Uganda to cut interest rates by 100bp to 11% is probably not a one-off. But, with inflation picking up and the shilling likely to come under pressure, we doubt that rates will fall much below 10%. … Uganda: interest …
6th June 2013
We expect a fall in agricultural commodity prices and a reduction in aid flows to lead to slower growth in Rwanda over the next couple of years. Nevertheless, increasing foreign direct investment into the natural resource sector and strong household …
5th June 2013
South Africa’s manufacturing PMI remained at a weak level in May, and a combination of sluggish external demand and domestic structural constraints means the sector is likely to continue struggling in the months ahead. … South African manufacturers …
3rd June 2013
Data released over the past month show that GDP growth slowed in both South Africa and Nigeria in Q1, but this masks important differences in the fortunes of the region’s two largest economies. In Nigeria, growth slowed to 6.6% y/y, from 7.0% y/y in Q4. …
31st May 2013
The South African rand has collapsed in the past month, falling by over 9% against the US$. The magnitude of the fall means that the currency may now be somewhat undervalued, but we expect it to remain weak over the coming months. … Rand in …
29th May 2013
South African GDP growth was slower than expected in Q1, and the outlook for the coming quarters is not very promising either. Nevertheless, the fresh sell-off in the rand leaves the Reserve Bank with little room to loosen monetary policy in the next few …
28th May 2013
The collapse in the rand over the past week or so means that, despite the continued weakness of South Africa’s economy, there is little room for the Reserve Bank to loosen monetary policy. In fact, it is possible that, should the sell-off in the rand …
23rd May 2013
The Central Bank of Nigeria resisted government pressure to cut interest rates this afternoon, but we suspect that a combination of below-trend growth and sub-10% inflation will pave the way for policy easing later this year. By contrast, the collapse in …
21st May 2013
Most countries in sub-Saharan Africa have seen their current account surpluses narrow or their deficits widen over the past few years, raising concerns that the region is vulnerable to balance of payments problems. But as this Watch explains, the region’s …
16th May 2013
Following today’s release of retail sales data for March, the Capital Economics South Africa GDP Tracker suggests that the economy picked up a little pace in the first quarter of this year. We think annualised GDP growth accelerated to around 2.4% q/q, …
15th May 2013
The slowdown in Nigerian GDP growth in Q1 was due in large part to the oil sector, but more importantly from the point of view of monetary policy, growth in the non-oil sector also cooled. With inflation falling as well, we think that interest rate cuts …
10th May 2013
The tailwind of high and rising copper prices is unlikely to continue supporting growth in Zambia over the next few years. But improving governance levels and increasing infrastructure spending suggest that the country will continue to outperform the rest …
The Central Bank of Kenya cut its benchmark interest rate by a larger-than-expected 100bp to 8.50% today but, with inflation having bottomed out and the current account deficit still a cause for concern, we think this marks the end of the monetary easing …
7th May 2013
Inflation is likely to slow across West Africa in the near term, meaning that interest rate cuts are still a possibility. By contrast, inflation is likely to accelerate in East and South Africa. In East Africa, this is likely to bring an end to the recent …
3rd May 2013
South Africa’s manufacturing PMI for April suggests the sector may have rebounded a little at the start of Q2 having stagnated in Q1. But a combination of sluggish external demand and domestic structural constraints means the sector still faces a number …
2nd May 2013
Sub-Saharan Africa’s eurobond markets hit the headlines again in April when Rwanda became the latest country to issue foreign currency debt. And with much of the region continuing to enjoy low yields by past standards, we think that a number of other …
30th April 2013
The latest data for South Africa suggest that the economy picked up pace in Q1, supported in large part by a rebound in mining production after last year’s strikes. Elsewhere in the region, although Q1 data is thin on the ground, there are signs that …
26th April 2013
Growth in South Africa’s manufacturing sector appears to have stagnated in the first quarter of 2013, but some policymakers have suggested that production could soon pick up as a weaker rand helps to boost competitiveness. In this Africa Watch we argue …
24th April 2013
An economic slowdown in China is likely to drag on growth in sub-Saharan Africa, but the more important point is that the effects will vary from country-to-country. Zambia is probably the most vulnerable, followed by South Africa. Meanwhile, Nigeria looks …
22nd April 2013
The sharp drop in gold prices over the past week or so has led to a sell-off in South Africa’s stock market, but the sector’s declining importance to the overall economy means that, so long as further large falls are avoided, the impact on GDP growth …
19th April 2013
South African inflation is likely to rise above the Reserve Bank’s 3-6% target range in the near term, possibly as early as this month. Nevertheless, any spike should prove temporary, and inflation is likely to begin falling again by Q3. … South Africa: …
17th April 2013
The sharp widening of South Africa’s current account deficit in 2012 has grabbed most of the headlines, but the more worrying issue is the deterioration in the quality of capital inflows that are financing the shortfall. As such, South Africa’s economy …
15th April 2013
The strong rebound in South African mining output in the early part of 2013 suggests that the sector made a decent contribution to overall GDP growth in Q1. But nevertheless, the sector still faces a number of challenges, including labour unrest and …
11th April 2013
Inflows of foreign direct investment to sub-Saharan Africa have increased markedly over the past decade or so, with growth being strongest in countries that have a) a large endowment of natural resources and b) improving levels of governance. Looking …
9th April 2013
GDP data released over the past week or so show that, while growth in a number of sub-Saharan Africa’s smaller economies slowed in the latter part of 2012, the region was still one of the world’s better performers last year. Looking ahead, we expect …
5th April 2013
Kenyan financial markets have rallied in the past few days following the Supreme Court’s ruling that the presidential election held in March was legitimate. Nevertheless, with growth appearing to have slowed and president-elect Uhuru Kenyatta facing trial …
3rd April 2013
After falling in 2012 and early 2013, yields on African eurobonds have edged up over the past few weeks. However, the sell-off in the bond market has not been confined to Africa, as the spread over Treasuries of the broad JP Morgan EMBI+ Index of emerging …
27th March 2013
Events in sub-Saharan Africa have been dominated by presidential elections in Kenya. By past standards at least, the vote was peacefully and markets have remained stable. The shilling has actually strengthened a little against the dollar since the start …
26th March 2013
Concerns over the impact of a weak rand on inflation leaves the South African Reserve Bank with little room to cut interest rates over the coming months, despite the outlook for subdued economic growth. … Weak South African rand leaves little room for …
20th March 2013
Although the Central Bank of Nigeria left interest rates on hold at 12.00% today, we still think that monetary easing will come onto the agenda later this year. However, a combination of loose fiscal policy and a weakening currency means that rate cuts …
19th March 2013
China’s rapid development and integration into the global economy has had important effects on a number of countries across sub-Saharan Africa (SSA). In this Africa Watch , we take a closer look at trade relations between China and SSA’s largest economy, …
18th March 2013
The growth outlook for sub-Saharan Africa (SSA) remains good. Admittedly, the region will not be immune from global headwinds, particularly from the ongoing recession in Europe. Export demand may also suffer if, as we expect, the rebound in China peters …
15th March 2013
The Central Bank of Kenya kept its benchmark interest rate on hold at 9.50% today and, with inflation having bottomed out and the current account deficit still a cause for concern, we think this marks the end of the monetary easing cycle. … Kenyan rate …
12th March 2013
On the face of it, an earlier-than-expected victory for Uhuru Kenyatta in Kenya’s presidential election has reduced the risk of public unrest and political uncertainty that had previously threatened to overshadow the poll. But a disputed result, as well …
11th March 2013
Over the past decade, fluctuations in the South African rand seem to have been driven primarily by changes in global risk appetite. But while risk appetite has improved over the past six months, the rand has weakened, and has in fact been the worst …
8th March 2013
Kenya’s parliamentary and presidential elections have so far passed relatively peacefully, helping to keep markets calm amid news that the results have been delayed due to technical problems. But the acid test will come only when there is a clearer …
6th March 2013
We doubt that Ghana’s fiscal deficit will fall as quickly as the Finance Ministry seems to expect in its 2013 Budget Statement. Coupled with the fact that growth is now picking up, this means that interest rate cuts now look unlikely this year. … Ghana: …
5th March 2013
The South African manufacturing PMI ticked up in February, but the overall sluggishness of export demand and problems in the domestic supply chain means the sector still faces significant challenges in the months ahead. … South African manufacturers …
1st March 2013
The Nigerian economy returned to trend growth in Q4 on account of a strong performance in the non-oil sector. Nevertheless, with the oil sector continuing to drag on headline growth and inflation now slowing, we think that interest rate cuts are still …
28th February 2013
The South African Finance Ministry today nudged up its forecasts for the fiscal deficit for the next three years, but we suspect that the budget shortfall may still surprise on the upside. … South Africa: fiscal consolidation postponed …
27th February 2013
South African Q4 GDP surprised on the upside but, 2009 aside, sub-Saharan Africa’s (SSA’s) largest economy still grew at its slowest pace for over a decade over the course of last year as a whole. Meanwhile, recent data for Kenya and Ghana suggest that …
South African Q4 GDP surprised on the upside but, 2009 aside, the economy still grew at its slowest pace for well over a decade last year. The drag from the mining sector is likely to ease over the coming quarters and a weaker rand should provide some …
26th February 2013
Following a strong start to the year, the rally in sub-Saharan African equity markets has lost a little steam in the past few weeks. Nevertheless, the MSCI frontier Africa index is still up by around 7% since the start of 2013, and continues to …
22nd February 2013
