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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
The ongoing weakness of the South African economy has raised questions over the potential impact on the rest of sub-Saharan Africa. In this Watch , we argue that, due to a variety of factors, trade links with South Africa remain relatively small. This …
12th November 2013
Our GDP Tracker suggests that the South African economy lost a bit of steam in Q3, with annualised GDP growth slowing to around 2.2% q/q, from 3.0% q/q in Q2. … South Africa GDP Tracker suggests slowdown in …
7th November 2013
The Central Bank of Kenya (CBK) kept interest rates on hold today and, with inflation having peaked, pressure to raise rates in the near term has eased. But a large current account deficit that is being funded by short-term inflows of capital means that …
5th November 2013
The South African manufacturing PMI rose in October, suggesting that growth in the sector has picked up at the start of Q4. However, the series has been volatile in recent months. Cutting through some of the noise, the PMI surveys suggest that the economy …
1st November 2013
Like most other major emerging market currencies, the South African rand has rebounded over the past month as markets have adjusted to the prospect of US monetary policy staying looser for longer than initially expected. But while the rand has …
30th October 2013
South Africa’s unemployment rate fell to its lowest level since 2011 in Q3 but, while this is encouraging, it needs to be seen in a wider context. Unemployment remains above its natural rate, which itself is extremely high and unlikely to fall by much in …
29th October 2013
The production of natural resources will be a key driver of growth in Ghana, Mozambique and Tanzania over the coming years, but it is also likely to bring a number of challenges. In Ghana, oil production alone won’t be enough to solve its budget and …
25th October 2013
The South African Finance Ministry chose to revise up its forecasts for the fiscal deficit in 2014/15 and 2015/16 rather than unveil new tightening measures in today’s medium-term budget statement. This was perhaps to be expected, given the proximity of …
23rd October 2013
The prospect of monetary policy staying looser for longer than initially expected in the US has left open a window for potential bond issues in Africa. We still expect a number of countries in the region to issue debut dollar-denominated bonds in the …
22nd October 2013
The fiscal tightening entailed in Zambia's budget for 2014 means that economic growth is likely to slow over the next year or so. Nonetheless, despite the overall cut in expenditure, public investment is likely to rise, which should benefit economic …
18th October 2013
The South African rand was one of the hardest hit EM currencies during the summer sell-off and has now fallen by 15% against the US$ since the start of the year. However, as this Watch explains, a combination of a widening current account deficit and …
17th October 2013
The IMF is right to argue that fiscal policy in South Africa needs to be tightened over the coming years in order to put public debt on a stable path. But its recommendation that South Africa adopt a “debt ceiling” would not necessarily impose greater …
11th October 2013
Sub-Saharan Africa is likely to remain one of the world’s fastest-growing regions over the next few years. Domestic demand will remain the key driver of growth. And while several external headwinds will build – including weaker growth in China and tighter …
10th October 2013
On the face of it, comments yesterday from Ghana’s Finance Minister that oil revenues have been larger than expected this year should ease some concerns over the sustainability of the country’s twin deficits. However, a slowdown in import growth and a cut …
3rd October 2013
The South African PMI fell back in September but, following strong readings in the previous two months, it is likely that the manufacturing sector recorded decent growth in Q3 as a whole. … South African PMI falls but still indicates decent growth in …
1st October 2013
South Africa’s trade deficit was wider than expected in August, as the ongoing weakness of the rand led to a surge in the local-currency cost of oil imports. In turn, a widening trade deficit could lead to further weakness in the rand over the coming …
30th September 2013
Inflation has edged up in most countries in Africa in recent months, but Nigeria has bucked the trend. Here, inflation dropped to its slowest pace since April 2008 last month. This has been due in part to falling food inflation, as well as the more …
26th September 2013
The weakness of the naira and concerns over loose fiscal policy meant the Central Bank of Nigeria (CBN) kept interest rates on hold at 12.00% today, despite inflation remaining comfortably below target. Looking ahead, we expect rates to stay unchanged for …
24th September 2013
The surprise decision by the US Fed to delay the tapering of its asset purchases this month has provided a temporary reprieve for emerging market assets, including those in Africa. In light of this, we have tweaked some of our near-term forecasts for the …
23rd September 2013
The South African Reserve Bank (SARB) left rates on hold today and gave no indication that any change was likely in the foreseeable future. Growth remains below trend, but policymakers expect inflation to remain towards the upper end of the target range …
19th September 2013
A failure to sufficiently rein in large budget and current account deficits means that further monetary tightening is still likely in Ghana, despite the Central Bank’s decision to keep interest rates on hold today. We expect 100bp of hikes over the coming …
18th September 2013
An increase in capital expenditure across the region over the past few years means that the general widening in budget deficits may not be as worrying as the headline figures suggest. But there are some exceptions, most notably Ghana, where widening …
17th September 2013
The turbulence in financial markets over the past few months has raised concerns about how emerging markets will perform as global monetary conditions tighten. In the case of Africa, current account deficits in several countries have widened since 2008, …
13th September 2013
South Africa’s current account deficit widened in Q2, and the shortfall continues to be funded in largepart by short-term capital inflows. As a result, the economy remains among the most vulnerable to furtherreversals in investor sentiment towards …
10th September 2013
The widening of fiscal deficits in several economies in sub-Saharan Africa over the past few years has increased the importance of subsidy reform. The good news is that policymakers are starting to tackle the issues of subsidies, but reform is likely to …
9th September 2013
African currencies have come under renewed pressure in August, with the South African rand and the Ghanaian cedi suffering more than most. But while currencies have weakened, local equity markets have continued to rally. … Next move in Kenyan interest …
3rd September 2013
The South African manufacturing PMI rose to a six-year high in August, indicating a further uptick in overall GDP growth in Q3. But relatively high wage increases agreed in the past month or so are likely to add to underlying manufacturing competitiveness …
2nd September 2013
African currencies have come under renewed pressure in August, with the South African rand and the Ghanaian cedi suffering more than most. But while currencies have weakened, local equity markets have continued to rally. … Currencies still under …
30th August 2013
Economic growth in both South Africa and Nigeria accelerated a little in Q2, but there are important differences in the performance of the region’s two largest economies. In South Africa, GDP growth picked-up to an annualised rate of 3.0% q/q, from 0.9% …
28th August 2013
