Entries for 'Sub-Saharan Africa'
July 10, 2023
President Bola Tinubu took a bold policy stance since assuming office on May 29. Key was the removal of the fuel subsidy and adopting a managed float FX regime. The impact of the two changes will drive inflation but a unified FX is expected to provide medium to longer term macro-economic stability.
May 8, 2023
Following a controversial election, Nigeria’s new President will be sworn in this month. The new administration faces persistently high fiscal deficits and growing external vulnerabilities. FX-denominated debt has grown substantially, making future debt service requirements daunting.
March 28, 2023
Electricity shortages and logistical constraints are expected to weigh on growth. The drag will mainly stem from weakening export growth, while fixed investment and consumer spending should remain robust. Food inflation is proving stubbornly high, the greatest upside risk to inflation.
March 2, 2023
Fiscal consolidation plans were affirmed, but spending targets are too optimistic. A host of tax relief measures were provided to households and businesses, while, the planned takeover of Eskom’s debt by government, offers hope for electricity supply.
January 17, 2023
Ghana is trying to restructure its local and external debt, …
aiming for total debt of 55% of GDP in present value terms.
We show present value rati...
January 3, 2023
Schedule for the IIF's 2023 investor trips released.
December 5, 2022
Major SSA-4 countries remain vulnerable to the war and global recession. Ghana faces the highest risk of distress amid rising government debt, a depreciating currency, elevated inflation, and declining FX reserves. Softer commodity prices and tight financing conditions will help ease inflation.
July 27, 2022
Load shedding reached new record highs in recent months, with more to come. High-frequency data already reflect the impact on major sectors of the economy. With electricity problems persisting in July and expected to extend into the fall, overall economic activity likely fell markedly in Q2 and will decline further in Q3. Inflation probably peaked in June, but is expected to remain above 6% over H2, which will keep pressure on the SARB to continue tightening monetary policy.
July 1, 2022
Schedule for the IIF's 2022 virtual investor trips released.
June 29, 2022
Global liquidity conditions look set to tighten further, which will force CEEMEA central banks to continue to hike interest rates. Wider macro imbalances also call for tighter policies in some cases. Energy shortfalls could lead to falling output and employment, which would ease demand pressures.
January 28, 2022
Upside inflation surprises have prompted rate hikes by CEEMEA central banks. We project demand pressures to remain benign despite the ongoing recovery. Even so, markets are pricing further aggressive rate hikes in the coming months. Rising inflation has pushed up long-term bond yields across the region in ‘21H2. Wider term premiums reflect higher credit risk spreads in Turkey and Romania. South African bonds offer the most attractive real returns among CEEMEA bonds.
December 1, 2021
Nigeria’s exchange rate regime and FX shortages remain among the key issues. The Naira has come under renewed pressure in the parallel market in 2021Q3. We expect the CBN to undertake another step devaluation in the coming months. NDFs indicate that the currency could rise to NGN470/$ by the end of next year.
November 19, 2021
Inflation is rising due to higher food and energy prices, deglobalization, and supply chain disruptions. In addition, the recent increases in global CPI stem from widespread monetary easing and expansionary fiscal policy. Inflation may exceed central bank targets through 2022 and into 2023.
November 9, 2021
The recovery has been uneven, with activity below pre-Covid levels for some sectors. Uncertain economic prospects will likely keep authorities from tightening policies. Losses in recent local elections may lead to delays of critical fiscal adjustment steps. Global factors, including tighter global liquidity conditions, could weigh on the Rand. Abrupt depreciation would force the SARB to tighten earlier than otherwise expected.
November 1, 2021
The result of higher oil prices is a shift in purchasing power from oil consumers to producers. Oil exporters are getting a boost to their terms of trade, leading to wider CA and fiscal surpluses. Higher energy prices will hurt several EMDEs that remain heavily dependent on petroleum imports.
November 1, 2021
Frontier Sub-Saharan Africa is emerging from the pandemic shock, but growth is comparably weak. We project a strong pickup in non-resident capital flows to $56.1 bn in 2021 from last year’s $23.6 bn. The recovery in FDI is robust, but persistently higher investment will be needed over the medium term. Financial conditions remain favorable, and strong Eurobond issuance drives the rise in portfolio flows. IMF emergency financing in 2020 and this year’s general SDR allocation have provided critical support. Assistance from IFIs will continue going forward, albeit at lower levels and with stronger conditionality. In addition, external financing needs are set to rise as substantial Eurobond amortization looms large. Thus, the region will need to attract higher and less volatile inflows to reduce external vulnerabilities. External financing risks are highest in Ghana, where market concerns over the country’s dent are rising. Angola and Nigeria are under less pressure, while IMF programs should help Kenya, Senegal, and Zambia.
October 13, 2021
We project non-resident flows of $128 bn to CEEMEA countries in 2021. Higher FDI and the IMF’s SDR allocation are the most important drivers. Excluding one-offs, however, flows will remain below pre-pandemic levels. G3 tightening will likely reduce investors’ appetite for EM assets in 21Q4. But further rate hikes in CEEMEA should improve portfolio flows in 2022. Non-resident flows to the region are estimated to reach $98 bn next year.
September 29, 2021
In this note, we update out view on inflation and monetary policy in emerging markets. Rising inflation, even if partially transitory, has forced the hand of EM central banks. We expect inflationary pressures in many countries to peak in the next six months. Slowing growth, favorable base effects, and lower commodity prices will be the drivers. However, rate hikes were also prompted by expansionary fiscal policy in some cases. Furthermore, tightening global liquidity in 2022 may add pressure on central banks.
September 22, 2021
Renewed pandemic containment measures weigh on economic activity in Kenya and Uganda. Low vaccination rates due to supply constraints make a stop-and-start recovery more likely. Benign inflation dynamics have allowed the BoU to continue its accommodative policy stance. However, real interest rates are still attractive and foreign capital has flown into the local market. This has supported the UGS, which continues to appreciate in nominal and real effective terms.
September 15, 2021
Upside inflation surprises prompted rate hike in most CEEMEA countries. We expect inflation to ease across the region, but high uncertainty remains. In Russia, we now see a higher terminal rate and easing to start later in ’22. The SARB can likely afford to stay on hold longer with only one hike in ‘22. We expect gradual cuts in Turkey through 2022 in line with market pricing. Despite above-target inflation, the Ukrainian NBU will likely stay on hold.