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This is part of a series of reports outlining our key macro and market calls for 2023. Click here to view the full series. Our latest EM Outlook can be found here . EMs will experience one of the broadest slowdowns in GDP growth in 2023 since the 1990s. …
15th December 2022
Unabating price pressures to put policymakers in a bind November inflation data out of Nigeria came in stronger than expected, with the headline rate picking up to 21.5% y/y and price pressures increasing in m/m terms as well. Together with our …
Economy lost momentum at the start of Q4 October’s hard activity data out of South Africa showed the economy’s strong performance in Q3 did not last into Q4. Industrial sectors, in particular, faltered. As headwinds mount, we expect a sharp slowdown. …
14th December 2022
Softer inflation will allow SARB to slow tightening Inflation in South Africa eased a bit more than expected, to 7.4% y/y, in November and there were encouraging signs that core price pressures are fading. The figures will provide room for the Reserve …
Still a long road ahead to restoring debt sustainability The news that Ghana has secured a $3bn staff-level agreement with the IMF will go some way to easing the country’s economic crisis, but the government still needs to clear a number of hurdles to put …
13th December 2022
SA’s politics, Eskom, growth and debt conundrum South Africa’s political upheaval took a breather this week but fears about the state electricity company, Eskom, have grown. Problems at Eskom not only pose a threat to economic activity but, if left …
9th December 2022
As the authorities in Ghana take further steps towards a debt restructuring, in this Update we take stock of the latest developments and their economic implications. The twists and turns of Ghana’s unfolding economic crisis as well as policymakers’ …
7th December 2022
Strong rebound, but signs of underlying weakness South Africa’s economy rebounded in Q3, with a 1.6% q/q expansion, but the underlying picture was less rosy as growth was supported by a build-up of inventories; household spending contracted . Persistent …
6th December 2022
South Africa’s political turmoil that severely endangered President Cyril Ramaphosa’s position has already shaken the country’s financial markets. In p art, this is related to the prospect of the ruling party attempting to shore up its dwindling support …
2nd December 2022
The damning report into corruption allegations surrounding South Africa’s President Cyril Ramaphosa has increased the possibility of him either resigning or being removed from office. Even if he stays on, the ruling ANC’s popularity will take a hit. To …
1st December 2022
South Africa’s manufacturing PMI increased in November, to 52.6, but underlying activity in the sector is likely to remain subdued as the combination of sustained power cuts and fiscal and monetary policy tightening bites. And the pick-up in the prices …
Most central banks across Sub-Saharan Africa raised interest rates over the past month and, in contrast to many other parts of the emerging world, we think tightening cycles will last a while longer. Interest rates were hiked in Nigeria, South Africa, …
29th November 2022
Untangling Ghana’s fiscal mess? Official statements this week by the authorities in Ghana signalled commitment to restoring fiscal and debt sustainability, and left little doubt that this will include a sovereign debt restructuring. Finance Minister Ken …
25th November 2022
Today’s decision in South Africa to raise the benchmark rate by 75bp, to 7.00%, signalled that policymakers remain in inflation-fighting mode and the tightening cycle has further to run. That said, the balance on the MPC appears to be shifting towards …
24th November 2022
Marked pick-up in growth unlikely following Q3 slump GDP growth in Nigeria slowed to 2.2% y/y in Q3 as woes in the oil sector intensified and key parts of the non-oil economy, such as agriculture and manufacturing, performed poorly. Even with …
Despite its strength this month, we think the headwinds facing the South African rand remain in place and expect it to reach fresh lows against the US dollar through the middle of next year. Amid the broad-based weakness in the dollar following the …
23rd November 2022
Surprisingly strong inflation to keep hawks in majority South Africa’s headline inflation rate picked up unexpectedly in October, to 7.6% y/y, and the jump in core inflation will be a particular worry for policymakers. Another 75bp hike in the repo …
The Central Bank of Nigeria (CBN) raised the benchmark rate by 100bp, to 16.50%, today, and MPC members appear to be itching to take their foot off the monetary policy brakes. But we suspect that the incoming inflation data will prevent them from doing so …
22nd November 2022
In next week’s MPC meetings in South Africa and Nigeria, inflation concerns are likely to hold sway over economic woes, and we expect both central banks to keep raising interest rates. South Africa’s tightening cycle is likely to continue for some time, …
18th November 2022
September’s hard activity data out of South Africa were a mixed bag, but it looks like the economy narrowly avoided another contraction in Q3 (and thus a technical recession). Even so, with headwinds mounting, economic activity is likely to stay subdued …
16th November 2022
Fresh upwards pressures pushing up inflation Data out of Nigeria showing a pick-up in inflation to 21.1% y/y in October offered little sign that price pressures are abating. And that’s before the effects of recent flooding and currency weakness have fully …
15th November 2022
SA may have just avoided a technical recession The surprising strength of South Africa’s manufacturing data for September released this week has lengthened the odds that the economy was in a technical recession over Q2 and Q3. Figures released earlier …
11th November 2022
Nigeria’s demonetisation efforts are likely to add to already-high economic costs of the country’s unorthodox policies. The resulting currency falls will fuel inflation further and disruptions to activity are more or less inevitable, supporting our …
10th November 2022
South Africa: strikes loom as wage talks collapse South Africa is on the cusp of large public sector strikes which will deal another blow to the recovery and raise the risk of fiscal slippage a week after the Medium Term Budget Policy Statement (MTBPS). …
4th November 2022
The Nigerian central bank’s plans to replace high-value bank notes by the end of January will, if India’s experience in 2016 is anything to go by, disrupt activity and fail to address some of the problems (e.g. illicit activity) that policymakers are …
3rd November 2022
PMI picks up, but outlook remains gloomy South Africa’s manufacturing PMI picked up in October but persistent electricity supply problems, tight fiscal and monetary policy and a worsening external backdrop mean that the economic recovery will continue to …
1st November 2022
The past month has brought further signs that economies across Sub-Saharan Africa are in the midst of a slowdown. The latest activity data out of South Africa suggest that, after GDP contracted in Q2, its economy fell into a technical recession in Q3. …
31st October 2022
South Africa’s Medium Term Budget Policy Statement (MTBPS) on Wednesday provided further good news on the state of the public finances, but pressure for public sector wage increases is just one of a number of reasons to think that slippage on the latest …
28th October 2022
South Africa’s Medium-Term Budget Policy Statement published today showed that the government hasn’t (yet) been tempted to spend the windfall from the improvement in the public finances this year. And, by and large, the government expects to stick to its …
26th October 2022
Overview – Sub-Saharan Africa has suffered particularly heavily from the pandemic and then spillovers from the war in Ukraine, and the global recession will only add to the headwinds. Taken together with tight fiscal and monetary policy, we hold a …
25th October 2022
South Africa’s Medium Term Budget Policy Statement (MTBPS), scheduled for Wednesday, is unlikely to provide the drama that the UK’s “mini-Budget” did, but we suspect that the government will tilt fiscal policy in a looser direction even as officials …
21st October 2022
Our Emerging Markets team gave our clients their immediate reaction to the Medium Term Budget Policy Statement (MTBPS) on 26th October. The team addressed key issues, including: Whether the government will spend or save this year’s revenue windfall; If …
20th October 2022
August data increases chances of a technical recession August’s hard activity data out of South Africa and more timely indicators point to a small fall in GDP in Q3, marking a technical recession. Even so, we expect the Reserve Bank to stay focused on …
19th October 2022
Inflation ticking down, but monetary policy to remain hawkish While South Africa’s headline rate edged down to 7.5% y/y in September, the surprising strength of core inflation will push policymakers to deliver another 75bp hike in the benchmark interest …
Inflation nearing peak The rise in Nigeria’s headline inflation rate to a 17-year high of 20.8% y/y last month reinforces our view that policymakers will raise the benchmark rate by a further 100bp, to 16.50%, in November. That will likely mark the end of …
17th October 2022
Nigeria: Buhari administration’s farewell budget The shelf life of Nigeria’s recently presented budget plans is likely to be short with elections due in early-2023 and no guarantee about policy continuity. In a budget speech late last week, …
14th October 2022
Ghana’s economy held up well in the first half of this year but high and rising inflation, combined with monetary and fiscal tightening, means that a sharp slowdown is on the cards. Talks with the IMF over a financing package are underway but this looks …
12th October 2022
Central banks have the tools to deal with liquidity crises arising from rising interest rates and falling asset prices. Instead, the bigger threat is that higher interest rates produce large and simultaneous falls in asset prices that threaten the …
11th October 2022
The bi-annual Monetary Policy Review (MPR) released this week by the South African Reserve Bank (SARB) bolsters our view that the monetary tightening cycle will continue to take on a distinct path to most other EM central banks. In many ways, the SARB has …
7th October 2022
Manufacturing sector struggling to recover from Q2 downturn The drop back in South Africa’s manufacturing PMI in September paints a worrying picture that the sector may have contracted again in Q3. Ongoing electricity supply problems, combined with a …
3rd October 2022
Political considerations ahead of key elections in South Africa and Nigeria are likely to add to reasons to loosen fiscal policy over the coming quarters. Severe power cuts continued in South Africa this week, which past experience shows will have weighed …
30th September 2022
Just like their peers in advanced economies, monetary policymakers across Sub-Saharan Africa have turned more hawkish recently. Central banks in South Africa and Nigeria hiked interest rates aggressively this month. Reining in inflation is clearly the …
29th September 2022
The Central Bank of Nigeria (CBN) upped the pace of its tightening cycle today, increasing the benchmark rate by 150bp, to 15.50%, as officials have become increasingly concerned about sky-high inflation and mounting pressure on the currency. We now think …
27th September 2022
Policy tightening in Ghana: past, present and future Despite the release of better-than-expected Q2 GDP growth figures in Ghana, the economic outlook remains gloomy as policy tightening to address the country’s debt woes will increasingly bite. Data …
23rd September 2022
The latest data out of Nigeria suggest that economic pain is mounting under the weight of troubles in the key oil sector as well as the country’s unorthodox FX policies. With little reprieve on the horizon, we expect GDP growth of 2.3% this year, well …
Today’s decision in South Africa to raise the benchmark rate by 75bp, to 6.25%, despite weakness in the economy suggests that policymakers are prioritising tackling inflation above all else. We think that the tightening cycle is far from over and expect …
22nd September 2022
Inflation passed its peak, but monetary policy hawks still hold most sway The fall in inflation in South Africa, to 7.6% y/y in August, marked the first sign that price pressures are turning a corner. But we doubt this will be enough to convince the …
21st September 2022
Nigeria’s oil output slump typifies economic woes The fall in Nigeria’s oil production in August to a 50-year low, coming alongside the recent drop back in oil prices, reinforces our downbeat view on the economy’s prospects. The OPEC Monthly …
16th September 2022
Inflation surpasses 20% Nigeria’s headline inflation rate surpassed 20% y/y for the first time in 17 years in August and we think that this will prompt the central bank to respond with a 50bp increase to its benchmark interest rate, to 14.50%, later this …
15th September 2022
Economic struggles to continue beyond Q3 July’s hard activity data out of South Africa suggest that the economy started the third quarter on a weak footing. With little momentum, GDP growth is likely to be subdued over the coming quarters. But that is …
14th September 2022
