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End of monetary tightening not far away as inflation falls Inflation in South Africa came in softer than expected, at 7.2% y/y, in December, and with core inflation ticking down as well, we think that a slowdown in the tightening cycle is nailed on. We …
18th January 2023
Recent data suggest that Nigeria’s economy was struggling even before demonetisation efforts hit activity late last year. And we don’t expect economic news to take a turn for the better any time soon as further disruptions are likely no matter who wins …
17th January 2023
Dip in inflation to turn CBN’s hawks into minority December inflation data out of Nigeria, at 21.3% y/y, came in below expectations, and provided a first sign that inflation passed its peak. Policymakers are likely to latch onto the fall in inflation and …
16th January 2023
At a key policy conference, South Africa’s ruling party officials offered little by way of new ideas to address the country’s mounting economic challenges. And some fresh proposals risk making matters worse. The ruling African National Congress (ANC) …
13th January 2023
In the first instalment of our Election Watch series ahead of the late-February polls in Nigeria, we assess the economic policies proposed by key candidates. The elections offer a chance to depart from unorthodox policymaking under the outgoing …
12th January 2023
Sub-Saharan Africa’s grim year ahead Last year ended with the bang of Ghana’s sovereign default , and 2023 has started with economies bracing for disruptions due to the end of zero-COVID in China and a looming global recession. While these are likely to …
6th January 2023
PMI picks up, but manufacturing sector set for tough 2023 South Africa’s manufacturing PMI picked up for a fourth consecutive month, to 53.1, in December but the backdrop of persistent power cuts, tight policy and a global recession means that we think …
2022 will be a year to forget for most African economies – one marked by a slowdown in growth, tighter external financing conditions and balance sheet strains. This culminated in Ghana opting to default on much of its external debt earlier this week. …
23rd December 2022
The performance of African economies diverged early this year, but the latest data provide clearer signs that growth across the region is now slowing. Economic weakness seems most pronounced in Ghana, where the impact of the country’s sovereign debt …
20th December 2022
Click here to read the full report. Overview – The challenging external backdrop means that growth across Sub-Saharan Africa is likely to slow in 2023, and by much more than most expect. Currencies are likely to weaken and public debt fears will grow, …
19th December 2022
Ramaphosa still in, De Ruyter out, economy down This week, South Africa’s president dodged impeachment and is likely to be re-elected as leader of the ruling ANC party over the weekend, but the country’s economic challenges have only grown. Early this …
16th December 2022
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
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 …
27th 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
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
