Sub Saharan Africa Economic Forecast

Economic Snapshot for Sub-Saharan Africa

December 13, 2019

Sub-Saharan Africa’s economy is seen shifting into a higher gear next year, mainly driven by quickening, albeit still modest, growth in the resource-rich economies of Nigeria and South Africa. The U.S.-China trade war, lackluster global economic activity, commodity-price volatility, growing external debt concerns and the slow enactment of reforms all cloud the outlook.

Sub-Saharan Africa Monetary & Financial Sector News

Regional inflation spiked from 12.8% in September to 14.1% in October. Runaway inflation in Zimbabwe and higher food price growth in Nigeria, prompted in large part by the closure of its land borders, drove the upturn. Next year, although price pressures are seen receding somewhat on still-tight central bank policy, they are set to remain elevated overall. 

Most monetary authorities in the region remained on hold recently. Notably, Kenya’s Central Bank slashed its key rate to spur economic activity while policymakers in Zambia hiked the policy rate in a bid to halt the declining kwacha. Going forward, the region’s central banks are expected to maintain relatively tight policy stances amid sticky inflationary pressures. 

Currency performance across the region was mixed in recent weeks. While the Kenyan shilling gained ground against the U.S. dollar on upbeat remittance inflows, Ghana’s cedi continued to weaken amid eroding fiscal metrics. A sizeable majority of the region’s currencies are expected to depreciate in 2020, albeit at a weaker pace than this year.

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