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PMI makes for grim reading South Africa’s manufacturing PMI fell even further in July as power cuts intensified again and the outlook remains bleak – we remain comfortable with our forecast for the economy as a whole to stagnate this year. Price pressures …
1st August 2023
Central Bank of Nigeria’s reluctance to hike This week, the CBN’s policy rate hike of 25bp underwhelmed markets, presenting further evidence that Nigerian policymakers are trading off growth concerns with their inflation mandate. The MPC chose to hike …
28th July 2023
Policymakers at the South African Reserve Bank are keen to emphasise that their work to tame the “inflation monster” is not over, leaving open the possibility of additional monetary tightening. The two most likely triggers would be, first, if loadshedding …
27th July 2023
Sub-Saharan Africa is set to record its weakest growth this year, outside of the pandemic, since 2016 as the drags from domestic headwinds are exacerbated by a less favourable external environment. Our GDP growth forecasts across the region are generally …
26th July 2023
New CBN governor stumbles at the first hurdle The Central Bank of Nigeria’s decision to raise its policy rate by just 25bp, to 18.75%, was underwhelming and suggests that officials are trying to balance tackling inflation against the president’s wishes …
25th July 2023
Food supply concerns mount The near-term outlook for global food security and prices has continued to worsen. Following the recent news that we are entering El Niño, this week saw the collapse of the Black Sea Grain Deal as well as India ban the export of …
21st July 2023
This webpage has been updated with additional analysis and charts since first publication. The further fall in inflation in June, coupled with signs of economic weakness and a decline in risk premia, prompted the South African Reserve Bank to leave its …
20th July 2023
Weakness in May looks set to continue The worse-than-expected South African retail sales figures for May add to the raft of weak activity data and it looks like things may get even worse over the coming months. Coupled with figures earlier today showing …
19th July 2023
Drop in inflation means SARB to stand pat tomorrow The larger-than-expected fall in South Africa’s headline inflation rate to 5.4% y/y in June brings it back within the Reserve Bank’s 3-6% target range for the first time since April 2022 and means that …
The blow to Nigeria’s economy from a failed demonetisation exercise is fading but there are already signs that the inflationary effects of the devaluation of the naira and removal of fuel subsidies are weighing on activity. We expect near-term GDP growth …
18th July 2023
Stage 6 loadshedding returns with a vengeance Cold weather in South Africa prompted officials to return to Stage 6 loadshedding this week, threatening a fresh hit to the economy. We doubt that concerns about the inflationary impact of power cuts will …
14th July 2023
The sharp improvement in South Africa’s budget in recent years has started to reverse. And this trend is set to continue as austerity is eased ahead of the 2024 election and revenues fall short of expectations. The debt-to-GDP ratio will continue to rise, …
13th July 2023
The El Niño weather pattern is on its way and threatens to hit agricultural production across much of Africa over the coming months, curtailing GDP growth, pushing up inflation and dealing a fresh blow to fragile balance of payments positions. There’s …
7th July 2023
Tanzania’s economic growth will remain sluggish by past standards over the next couple of years due to the effects of persistent drought and tight fiscal policy. But with policymaking shifting in a more business-friendly direction under President Hassan …
6th July 2023
PMI falls further, easing price pressures to stay SARB’s hand South Africa’s manufacturing PMI fell in June to its lowest level since mid-2021 and remains consistent with declines in output in the sector over the coming months. The survey also shows that …
3rd July 2023
Kenya: Thugge makes his mark Kenya’s central bank hiked interest rates by 100bp, to 10.50%, at an unscheduled meeting this week. The move was pinned on an increase in inflation in May, but more than anything it seems to be a strong attempt by new governor …
30th June 2023
Risk premia have fallen across the region over the past month. In the region’s largest economy, Nigeria, that has come on the back of a marked policy shift since President Tinubu took office in late-May. Costly fuel subsidies have been removed and the …
28th June 2023
The removal of fuel subsidies and the devaluation of the naira are likely to push inflation in Nigeria towards 35% y/y, which will prompt further interest rate hikes by the central bank and weigh on GDP growth over the coming quarters. Our growth …
27th June 2023
Zambia secures deal with official creditors This week saw Zambia edge closer to getting a debt restructuring over the line, but an agreement with official creditors suggested that there remain sticking points when it comes to negotiations with China. …
23rd June 2023
Governments in Turkey and Nigeria have started to turn away from unorthodox economic policies in recent weeks, and in both cases currencies have been allowed to move closer to fair value. The key thing to watch next is whether central banks in both …
21st June 2023
This webpage has been updated with a table and chart of key data. Weaker inflation probably means tightening cycle is over The larger-than-expected decline in South Africa’s headline inflation rate, to 6.3% y/y, reinforces our view that the tightening …
This week’s plunge in the Nigerian naira marked the latest positive step by President Bola Tinubu as he seeks to overhaul the economy, but there are still plenty of reasons to be cautious that this policy shift marks a clean break from the Buhari-era. A …
16th June 2023
Inflation edges up and set to soar in June Nigeria’s headline inflation rate rose to a fresh 17-year high of 22.4% y/y and the recent removal of fuel subsidies alongside yesterday’s devaluation of the naira mean that it is likely to surge to more than 30% …
15th June 2023
Policy shift continues, but reasons to remain cautious Reports that the Central Bank of Nigeria has devalued the naira would, if confirmed, represent another positive policy step by the new Tinubu administration. But we retain our reservations this is a …
14th June 2023
After dodging recession, economy made decent start to Q2 April’s activity data out of South Africa suggest that, after dodging a technical recession in Q1, the economy made a bright start to the second quarter. But external and domestic headwinds, …
Click here to read full text. Overview – Sub-Saharan Africa is set to record its weakest growth this year, outside of the pandemic, since 2016 as the drags from domestic headwinds are exacerbated by a less favourable external environment. Our GDP growth …
13th June 2023
The suspension and potential removal of Godwin Emefiele as Nigeria’s central bank governor raises hopes that there will be a shift away from the current unorthodox and interventionist monetary and exchange rate policies. A large devaluation of the naira …
12th June 2023
Agriculture dampened SA growth in Q1 South Africa’s Q1 GDP figures released this week revealed a big drag from the agricultural sector. Some of the factors that weighed on output (namely the weather) are likely to prove temporary but, even so, confidence …
9th June 2023
This webpage has been updated with a table and chart of key data Technical recession dodged, but outlook bleak The 0.4% q/q rise in South Africa’s GDP in Q1 means that the economy once again skirted a technical recession, but the outlook remains bleak. …
6th June 2023
Nigeria: subsidies slashed, naira nerves? In a positive early move, Nigeria’s President Bola Tinubu removed fuel subsidies in his first week in power. But it looks like the fiscal savings will be spent, leaving public debt on an upwards trajectory. And …
2nd June 2023
PMIs point to further falls in manufacturing ahead The fall in the South African manufacturing PMI in May leaves it at a level consistent with modest falls in output in the sector. And the collapse in the future conditions component suggests that things …
1st June 2023
SA: rising risk premia threaten high for longer rates One new threat to the inflation outlook that the South African Reserve Bank highlighted at its policy meeting on Thursday was a higher country risk premium which is fuelling downward pressure on the …
26th May 2023
Central banks in the region’s two largest economies, Nigeria and South Africa, both hiked interest rates this month and, whereas attention elsewhere is turning to rate cuts, the risks seem to be tilted towards further increases in both countries. …
25th May 2023
The South African Reserve Bank (SARB) hiked interest rates by 50bp, to 8.25%, today on the back of policymakers’ growing concerns about the inflationary impact of persistent power cuts. For now, we think that today’s move marks the end of the tightening …
The Central Bank of Nigeria’s decision to raise its policy rate by 50bp, to 18.50%, reaffirmed that officials continue to focus on tackling high and rising inflation at the expense of supporting the struggling economy. The increasing likelihood of fuel …
24th May 2023
This webpage has been updated with a table and chart of key data. Growth slows on back of demonetisation Nigeria’s economic growth slowed to just 2.3% y/y in Q1 as the damaging effects of a botched demonetisation process more than offset an easing of …
This webpage has been updated with a table and chart of key data. Rising core inflation to keep policymakers in hawkish mood South Africa’s headline inflation rate dropped back to 6.8% y/y in April but the further strengthening of core inflation will …
SA: threat of AGOA loss no disaster, but unwelcome Allegations that South Africa has supplied arms to Russia has led to calls for the country to lose preferential trade access to the US via the African Growth and Opportunities Act (AGOA). As it happens, …
19th May 2023
Over the past couple of weeks we have held a series of roundtable discussions with clients across Asia and North America on the outlook for EMs. In this Update we provide our thoughts on the recurring questions that we received, including on China’s …
A quick solution to South Africa’s energy crisis is nowhere to be seen. Not only will power cuts remain a drag on economy but there are growing concerns that they are fuelling inflation, threatening the country with a period of stagflation. That presents …
18th May 2023
Skirting technical recession, but power cuts threaten stagflation March’s activity data out of South Africa suggest that the economy is likely to have skirted a technical recession, but the outlook is bleak as the intensification of power cuts weighs on …
17th May 2023
South Africa has traditionally sought to be non-aligned and, in our ‘ mapping decoupling ’ work, we placed it in neither the US nor the China camp. But recent developments suggest that it could be leaning towards the latter. If that’s the case, it might …
16th May 2023
It’s been a week to forget for South Africa, in which fears emerged that the improvement in the public finances is stalling and concerns about (even more) intense loadshedding surfaced. That was topped off by allegations that South Africa supplied weapons …
12th May 2023
Sovereign dollar bond spreads have widened across Sub-Saharan Africa this week and are signalling further debt distress. In much of the region, spreads over US Treasuries are above or near the 1,000bp-mark – a commonly-used threshold for distress. This is …
5th May 2023
The idea of a new BRICS currency to settle trade or hold in reserves instead of the dollar has been doing the rounds recently. This could be modelled on the IMF’s Special Drawing Rights. But getting India on board with China would be difficult. And if the …
4th May 2023
Concerns about Kenya's public finances have intensified with the government recently delaying the payment of public employees' salaries. Policymakers appear willing to honour public debt obligations, but with plenty of pitfalls along the way, officials …
3rd May 2023
Pick-up in headline PMI hiding underlying weakness The rise in South Africa’s manufacturing PMI last month was due to a jump in inventories, while other indicators pointed to further weakness in the sector. The country’s severe energy crisis continued to …
2nd May 2023
The South African Reserve Bank’s Monetary Policy Review (MPR), published this week, made it clear that the central bank is increasingly incorporating fiscal risks into its interest rate projections and decision making process. The poor state of the public …
28th April 2023
Persistent and deepening electricity outages in South Africa are wreaking economic havoc. Almost half of generating capacity was offline this month, triggering severe “loadshedding”. Output in energy-intensive sectors – such as mining and manufacturing – …
27th April 2023
Sticky price pressures strengthening hawks’ hand Recently-released inflation figures out of Sub-Saharan Africa’s two biggest economies are likely to put pressure on policymakers in Nigeria and South Africa to raise interest rates further. March CPI data …
21st April 2023
