Sub Saharan Africa Economic Forecast

Economic Snapshot for Sub-Saharan Africa

August 21, 2019

Regional growth is now thus expected to hold steady from 2018’s modest outturn

This year, regional growth is seen remaining steady from 2018’s modest upturn, propped up by fast-growing, smaller economies like Ghana, Tanzania and Uganda. Externally, a slowing global economy, commodity price volatility and elevated trade tensions, combined with policy uncertainty, fiscal concerns and slow pace of reforms domestically, dampen the region’s outlook.

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Sub-Saharan Africa Monetary & Financial Sector News

Regional inflation jumped to 10.5% in June (May: 9.5%), on spiraling inflation in Zimbabwe and stronger food price growth in Kenya. Price pressures in the region are expected to subside marginally this year from 2018, driven by still-relatively tight monetary policy stances and increased FX stability. A preliminary estimate for July indicates that inflation held steady at 10.5%. 

With the exception of South Africa’s Central Bank, which cut its policy rate in mid-July amid benign inflation and weak growth, central banks across the region kept rates on hold recently. Looking ahead, the region’s policymakers are projected to further loosen policy by year-end, amid abating price pressures internally and the shift to more accommodative conditions globally.

Most of the region’s currencies weakened against the U.S dollar over the past month, especially South Africa’s rand which plunged amid increasing economic woes. Moreover, the recent “hawkish” rate cut by the Fed, which disappointed hopes for further reductions, weighed on emerging-market currencies. The vast majority of the region’s currencies are set to depreciate this year.

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