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Economy will continue to lose steam Nigeria’s GDP growth slowed to 3.1% y/y in Q1 as robust growth in the non-oil sector was more than offset by a slump in the oil sector. Looser fiscal policy ahead of elections in early 2023 will provide some support to …
23rd May 2022
Central bank hawks ascend amid market ruffles Recent investor risk-off sentiment has pushed up sovereign dollar bond yields across Sub-Saharan Africa, fuelling debt risks further. And central banks appear to be taking note, with some policymakers turning …
20th May 2022
Policymakers in South Africa upped the pace of tightening today, raising the repo rate by 50bp to 4.75%, as concerns about inflation (and inflation expectations in particular) have grown. We don’t think that the hawks will have their way for long though …
19th May 2022
Activity struggling even before hit from floods South Africa’s activity data for March were weak and that was even before flooding in KwaZulu-Natal province dealt a fresh blow to the economy. Inflation figures released earlier today may have increased the …
18th May 2022
Rise in core inflation raises risk of 50bp hike tomorrow South Africa’s headline inflation rate remained close to the upper bound of the Reserve Bank’s 3-6% target range in April, at 5.9% y/y, and will stay there over the coming months. Tomorrow’s …
Latest rise in inflation puts pressure on CBN to tighten Inflation in Nigeria jumped to 16.8% y/y last month and the headline rate is likely to rise further as spillovers from the war in Ukraine filter through. Pressure to tighten monetary policy is …
16th May 2022
Monetary politics in Nigeria Presidential guidance requiring the resignation of current government officials running for Nigeria’s highest office will likely leave the central bank without a governor as he is set to contest the presidential ticket, …
13th May 2022
The South African Reserve Bank is set to shake up its monetary policy setup. This Update provides some clarity on what policymakers will do and why, and what it means for monetary and credit conditions. What is the Reserve Bank planning? In November 2021, …
11th May 2022
Green shoots in SA recovery repeatedly uprooted Recent flooding in a key province and warnings this week that power cuts could reach unprecedented levels are the latest in a long list of blows to South Africa’s economy that have repeatedly stifled any …
6th May 2022
Overview – Sub-Saharan Africa’s recovery is likely to remain slow going and our growth forecasts are generally below the consensus. While spillovers from the war in Ukraine will boost a handful of economies – notably Angola and Nigeria – in others, the …
4th May 2022
Manufacturing sector knocked down in early Q2 The plunge in South Africa’s manufacturing PMI in April suggests that there was a large blow to activity from flooding in a key province and renewed power cuts. One consequence of this economic weakness is …
3rd May 2022
South Africa’s ANC: reforms gaining momentum? Momentum appears to be building within South Africa’s ruling ANC party to shift towards a more private sector-led economic model. But given its track record so far, we wouldn’t hold our breath. An ANC draft …
29th April 2022
Fiscal positions across Sub-Saharan Africa have been a persistent source of concern since the onset of the pandemic – and in some cases, even before. And the commodity price moves resulting from the war in Ukraine will be unfavourable for public finances …
28th April 2022
European officials have increasingly looked to Africa to replace gas supplies from Russia. In principle, the continent’s major producers like Nigeria and Angola (and in the medium term, potentially Mozambique and Tanzania) could benefit. But it’s unclear …
22nd April 2022
Inflation near top of target range The rise in inflation in South Africa in March, to 5.9% y/y, will keep the Reserve Bank’s tightening cycle going at the next meeting in May. But the weakness of core inflation supports our view that interest rates will …
20th April 2022
Floods another blow to SA’s growth momentum This week’s floods in South Africa’s KwaZulu-Natal province are the latest in a series of hits to the economic recovery. Violent unrest last July dealt a heavy blow to the economy and October’s steel sector …
14th April 2022
Activity figures paint downbeat picture South Africa’s hard activity data for February were a stark contrast to the recent upbeat surveys as output dropped back in the mining, manufacturing and retail sectors. Electricity problems, fiscal austerity and …
South Africa’s headline inflation rate will stay close to the upper bound of the central bank’s 3-6% target range in the coming months before falling sharply in the second half of the year. Some MPC members are in a hawkish mood, but we think that …
13th April 2022
Africa putting COVID-19 in the rear view mirror? Governments across Sub-Saharan Africa have scaled back COVID-19 restrictions in recent weeks and, despite low vaccination coverage, it seems the virus will be less disruptive to activity going forward. But …
8th April 2022
Ghana’s economic recovery will remain sluggish over the next couple of years as policy is tightened in a bid to shore up the public finances and tackle high inflation. The risk of an imminent sovereign default appears low but, if fiscal consolidation …
SA officials to give ground on public wages? Public sector wage negotiations will soon kick off in South Africa and there are reasons to think that officials may concede further ground to trade unions. A surging wage bill has been a key driver of the …
1st April 2022
Solid recovery in Q1 will add to SARB’s hawkishness The further rise in South Africa’s manufacturing PMI in March to a record high provides further evidence that the economy has rebounded strongly from the Omicron-driven dip in activity at the end of last …
Spillovers from the war in Ukraine will have a varied impact across Sub-Saharan Africa. Large oil producers such as Nigeria and Angola are benefitting from the surge in global oil prices but, for the rest of the region, it is worsening their terms of …
31st March 2022
The latest data from Nigeria suggest that the economy strengthened at the start of this year. But there are growing signs that the central bank’s draconian foreign exchange policies are leading to shortages of goods that are fuelling inflation and likely …
30th March 2022
Ghana: interest rates up, gov’t spending down The Ghanaian authorities took steps this week to shore up the cedi and tackle the poor public finances but, even though a sovereign default is not imminent, officials may eventually have to back down and turn …
25th March 2022
The upside inflation risks created by the war in Ukraine and the solid performance of South Africa’s economy prompted the Reserve Bank to push ahead with its tightening cycle today, raising the repo rate by 25bp to 4.25%. We maintain our view that rates …
24th March 2022
Shifts in commodity prices in response to the war in Ukraine will provide a sizeable boost to current account positions in Angola and (to a lesser extent) Nigeria this year. Elsewhere, however, higher energy import bills will more than offset any increase …
23rd March 2022
Inflation unchanged, but SARB to press ahead with tightening South Africa’s headline inflation rate was unchanged at 5.7% y/y in February but, with the war in Ukraine increasing upside inflation risks and signs that the economic recovery has been robust …
In this Update , we roll out our sovereign debt heat map that provides a snapshot of debt risks across Sub-Saharan Africa. The pandemic has increased debt burdens across the continent and, with elections on the horizon in many places, governments are …
21st March 2022
Nigerian economy feeling the pain from FX policies Evidence is building that Nigeria’s unorthodox exchange rate regime is fuelling inflation and increasingly damaging economic activity. Policymakers at the central bank have been reluctant to let the naira …
18th March 2022
Recovery picking up pace January’s hard activity data show that South Africa’s recovery gained ground following the Omicron virus wave. Taken together with more timely figures that point to a continued rebound in activity and mounting inflationary …
16th March 2022
Inflation ticks up, pressure building on CBN to tighten The small rise in Nigeria’s headline inflation rate to 15.7% y/y last month provides further evidence that draconian foreign exchange policies are causing shortages and fuelling price pressures. …
15th March 2022
High oil prices dashing upside risks to SA activity… The latest economic data suggest that South Africa’s recovery has gained ground, and some sectors will benefit from elevated metals prices caused by the war in Ukraine. But at a macro level, a mounting …
11th March 2022
Economy weathered Omicron breeze in Q4 South Africa posted decent GDP growth of 1.2% q/q in Q4, shrugging off the Omicron virus wave. While elevated commodity prices will support the economy over the coming months, growth is likely to slow considerably in …
8th March 2022
Flies in the ointment for African oil producers’ gains Oil prices have surged this week, but Africa’s main oil exporters – Nigeria and Angola – are unlikely to reap the full benefits due to persistent oil output problems and the mounting costs of fuel …
4th March 2022
Manufacturing recovery gathers speed The rise in South Africa’s manufacturing PMI in February suggests that the rebound in the sector picked up pace. But headwinds facing the industry and the wider economy mean this strength is unlikely to last. Figures …
1st March 2022
Elevated commodity prices on the back of the Russia-Ukraine crisis will almost certainly add to inflationary pressures across Sub-Saharan Africa. High prices for energy, metals and agricultural products that African countries export seem to have shielded …
28th February 2022
The fallout from the Russia-Ukraine conflict for SSA Direct economic and financial ties between Sub-Saharan Africa and the economies of Russia and Ukraine are limited, but African policymakers will have to contend with the indirect repercussions of the …
25th February 2022
Today’s budget showed that South Africa’s public finances are in a better-than-expected shape but the path to stabilise the debt ratio remains narrow. Mounting pressures to provide more fiscal support mean that we think policymakers will increasingly …
23rd February 2022
This week’s Budget in South Africa will probably see the government reaffirm its commitment to fiscal consolidation. But we think that officials will struggle to stay on this path in the next couple of years, leaving the debt-to-GDP ratio on an upwards …
22nd February 2022
South Africa’s upcoming budget speech will probably contain better-than-projected fiscal results, allowing the finance minister to extend temporary spending measures without undermining near-term budget targets. But this will increase the risk of …
18th February 2022
Growth unlikely to remain strong for much longer Nigeria’s GDP growth was unchanged at 4.0% y/y in Q4 as a slightly smaller drag from the oil sector was offset by a weaker performance in the non-oil economy. But we think that growth will drop back over …
17th February 2022
Economy shrugs off Omicron December’s hard activity data show that South Africa’s economy held up well in the face of the Omicron virus wave. GDP probably expanded by around 0.9% q/q in Q4, implying growth of 4.6% over 2021 as a whole. But growing …
16th February 2022
Inflation past its peak South Africa’s headline inflation rate edged down to 5.7% y/y in January, and with soft core inflation and a bumpy economic recovery, the monetary tightening cycle is likely to be more gradual than most expect. Figures released …
Inflation moving sideways Inflation in Nigeria was unchanged at 15.6% y/y in January and the headline rate will probably soften only gradually. At this point, however, policymakers are unlikely to hike interest rates in response. Figures released today …
15th February 2022
SONA: no bonanza, but tilt to more fiscal support The economy was a key theme in Thursday’s State of the Nation Address (SONA) in South Africa as President Cyril Ramaphosa vowed to press ahead with his reform drive but gave some ground to those in his …
11th February 2022
South Africa’s President Cyril Ramaphosa vowed to press ahead with his signature reform drive to boost the economy in Thursday’s State of the Nation Address (SONA), but most initiatives will take time to bear fruit. In the meantime, the president appeared …
Timely activity data suggest that, over Q4 as a whole, Nigeria’s economy came close to a standstill. The weak economic backdrop is likely to prevent the CBN from raising interest rates in the coming months. GDP growth eased in Q3 of last year, to 4.0% …
9th February 2022
Our downbeat view that most commodity prices will fall back by year-end is largely negative for economies across Sub-Saharan Africa, with Zambia and Angola likely to be hardest hit, although some net oil importers are likely to gain from softening oil …
8th February 2022
South Africa’s President Cyril Ramaphosa, facing an intra-party leadership contest in December, is set to use next week’s State of the Nation Address (SONA) as an opportunity to drum up support. From the perspective of fiscal policy, this is likely to …
4th February 2022
