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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
One year into Hakainde Hichilema’s presidency, Zambia has taken key steps on the path out of a sovereign default, including securing an IMF deal this month. But with debt restructuring talks yet to conclude in earnest, the road to debt sustainability …
13th September 2022
Zambia: pending debt relief may not be enough Analysis from the IMF this week suggests that, even with debt relief in the pipeline, putting Zambia’s public debt on a sustainable footing will be difficult. We will look in detail at the IMF’s projections …
9th September 2022
Fall in Q2 GDP pushes economy back below pre-pandemic level South Africa’s economy contracted by 0.7% q/q in Q2 and this is likely to be followed by only modest growth in the coming quarters. The outturn might raise second thoughts at the Reserve Bank …
6th September 2022
Zambia: IMF deal done, debt sustainability next This week’s rubber-stamping of Zambia’s IMF deal is certainly a welcome step but, with crucial sovereign debt restructuring details unknown, it remains unclear if it will prove to be sufficient to place …
2nd September 2022
Manufacturing sector rebound unlikely to last The rise in South Africa’s manufacturing PMI in August essentially reversed the sharp decline in July on the back of weaker global demand as well as severe power cuts at home. We expect external conditions …
1st September 2022
Relatively peaceful election proceedings in Kenya and Angola this month have provided a lift to investor sentiment. But with the respective losing presidential candidates challenging official results through the courts, the risk of violence lingers. …
31st August 2022
Another win for Angola’s ruling party President João Lourenço is on course to secure another term following this week’s elections in Angola. With the political backdrop little changed, we think that the economy will revert to its low growth path following …
26th August 2022
Bump in growth to be followed by slowdown GDP growth in Nigeria picked up to 3.5% y/y in Q2 as woes in the oil sector eased and the non-oil economy held up well. We expect the drag from the oil sector to diminish further in the coming quarters, but the …
Uncomfortably high inflation to keep hawks in majority The latest rise in inflation in South Africa to 7.8% y/y in July will raise the pressure on Reserve Bank officials to continue tightening policy aggressively. Even as signs of a faltering economy …
24th August 2022
Angola’s elections on Wednesday may be more competitive than ever before, but the ruling party’s decades-long hold on power is unlikely to come to an end. Assuming President Lourenço secures another term, the economy will probably slip back to a …
23rd August 2022
Ruto wins, but political risks remain elevated Deputy President William Ruto was this week declared winner in Kenya's presidential election, but the result is being challenged and the threat of violence lingers. Even if that is avoided, Mr. Ruto will …
19th August 2022
No escape from a fall in GDP in Q2 The hard activity data out of South Africa for June suggest that the economy contracted by around 1.0% q/q in Q2, and we think that activity will remain weak in the coming quarters too. June hard activity figures …
17th August 2022
Ruto wins, but political risks remain acute After nearly a week since voters went to the ballot box, William Ruto was finally announced President-elect in Kenya, but investors’ roller-coaster ride will probably continue over the coming days and weeks with …
15th August 2022
Latest jump in inflation to keep CBN in tightening mood Inflation in Nigeria jumped to 19.6% y/y last month and we think that the headline rate will rise a bit further. Policymakers are likely to respond by raising the benchmark interest rate from 14.00% …
The latest data out of Nigeria suggest that GDP growth weakened further in Q2. Ongoing production problems in the oil sector will drag on growth in the coming year and, while that is likely to be offset by fiscal stimulus ahead of February’s elections, we …
Political risks around Kenya’s elections still high The fact that Kenya’s elections have, so far, proceeded peacefully have supported a rally in the country’s bond market. But with no official results available yet and reports pointing to a tight race, …
12th August 2022
Ethiopia has been grappling with the fallout from its internal conflict and severe drought which, coming alongside spillovers from the war in Ukraine, will result in much weaker growth in the coming years and a sovereign debt restructuring is likely. Over …
10th August 2022
Zambia’s latest step towards debt sustainability News that Zambia’s official creditors agreed to provide debt relief is certainly encouraging and will unlock IMF funding. But the terms of the deal remain unknown, leaving in doubt that the country’s public …
5th August 2022
Kenya’s general election scheduled for Tuesday is set against a challenging economic backdrop, and no matter the winner, the country’s outlook is likely to remain overshadowed by large macroeconomic imbalances and high public debt risks. Kenya is heading …
Power crisis dealing heavy blow to manufacturing sector The decline in South Africa’s manufacturing PMI in July points to a large hit to activity from weaker global demand as well as severe power cuts at home. It will probably take some time before …
1st August 2022
Nigeria’s budget woes Data published by Nigeria’s Budget Office this week highlighted that, despite what should be a favourable high oil price environment, the public finances are actually getting worse. The figures showed that the federal government …
29th July 2022
For a major net oil exporter, Nigeria’s worsening economic struggles in the current high oil price environment are striking. Low oil production, which was 30% below the country’s OPEC+ quota in June, has curbed oil export revenues. Coming alongside …
27th July 2022
Overview – Sub-Saharan African economies are suffering heavily from the spillovers from Fed tightening and the war in Ukraine. Policy in the region is likely to tighten further as a result, weighing on growth. Indeed, our growth forecasts for this year …
26th July 2022
Tanzania, Kenya secure IMF funds The approval this week of an IMF package for Tanzania and the latest disbursement of a loan for Kenya will ease near-term balance of payments pressures. The Fund has pushed fiscal consolidation in both countries but, in …
22nd July 2022
South Africa’s central bank upped the pace of tightening further with a 75bp hike, to 5.50%, as policymakers’ intensifying fears about inflation (and inflation expectations) trumped any concerns about the slow and bumpy economic recovery. The increasingly …
21st July 2022
Policymakers in a bind after another jump in inflation The jump in inflation in South Africa to 7.4% y/y in June keeps a 75bp interest rate hike on the table at the SARB’s meeting tomorrow. But with policymakers clearly concerned about the weakness of the …
20th July 2022
The Central Bank of Nigeria (CBN) followed up May’s 150bp interest rate hike with a 100bp increase in the benchmark rate today, to 14.00%, as worries about inflation continued to mount. We now expect a 50bp hike at the next MPC meeting, although with …
19th July 2022
The latest population projections released by the UN this week reaffirm that demographics will support strong GDP growth in Sub-Saharan Africa in the long run. But similarly robust income convergence is likely to remain a pipe dream. Chart 1: Total …
15th July 2022
Q2 contraction on the cards The disappointing batch of South African activity data for May suggests that the economy is on course for a mild fall in GDP in the second quarter. The hard activity figures released this week by StatsSA made for pretty grim …
14th July 2022
Amidst sky-high oil prices, a stream of downbeat comments from Nigerian government officials on the state of the economy may seem mind-boggling. In this Focus , we outline what’s behind the country’s struggles, their economic implications and whether …
11th July 2022
Political risks take centre stage Resurfacing political risks in some parts of Sub-Saharan Africa are another threat to recoveries that are already facing multiple headwinds, while at the same time raising the pressure on several governments to provide …
8th July 2022
The decision by Ghana’s government to turn to the IMF will help to restore some calm among investors over the country’s poor public finances. But a very large fiscal squeeze is needed to restore debt sustainability and recent protests highlight the …
6th July 2022
Recent inflation figures out of the region and remarks from central bank officials point towards more, and potentially larger, interest rate hikes in most African economies over the coming months. A key exception is South Africa, where the latest …
1st July 2022
Manufacturing sector rebound slowing The drop in South Africa’s manufacturing PMI in June signals that the rebound from the floods that hit activity in April lost steam at the end of Q2. The sector was probably a considerable drag on headline GDP growth …
If past experience is anything to go by, deepening electricity supply cuts in South Africa are likely to deal a heavy blow to activity in energy-intensive sectors such as mining and manufacturing. Even if loadshedding is scaled back in the coming weeks, …
30th June 2022
The hawkish turn by DM central banks over the past month has further soured investor risk appetite, and capital inflows into African economies are likely to have slowed. Countries with large external financing requirements, and heavy debt burdens …
Exposing corruption in South Africa The conclusion of a multi-year inquiry into corruption in South Africa and recent allegations of impropriety involving the president are likely to undermine his standing ahead of key party leadership elections, and also …
24th June 2022
Inflation jumps, now a choice between 50bp and 75bp hike next month The rise in inflation in South Africa to an above-target 6.5% y/y in May is likely to shift the debate to a choice between a 50bp and a 75bp hike to interest rates at July’s MPC meeting. …
22nd June 2022
Inflation in South Africa has been close to the top of the central bank’s target range in recent months, but the country has avoided the surge in inflation seen across much of the world. And there are reasons to think that the headline rate will drop back …
21st June 2022
