Sub Saharan Africa Economic Forecast

Economic Snapshot for Sub-Saharan Africa

June 29, 2020

The region to suffer its worst contraction on record this year

The region will likely suffer its worst contraction on record this year as the Covid-19 pandemic ravages activity. Languishing demand from key trading partners; steep declines in prices for commodities like oil, minerals and metals; and drastic containment measures domestically will pummel economies. Rising public debt burdens and limited fiscal space cloud the outlook further.

Sub-Saharan Africa Monetary & Financial Sector News

Regional inflation edged up to 15.2% in May (April: 15.0%). Rising food inflation in Angola, Ghana and Nigeria in large part drove the acceleration, while inflation keeps soaring in the triple digits in Zimbabwe. Ahead, inflation in Sub-Saharan Africa is set to remain elevated and above 2019, fueled by weaker currencies and supply disruptions induced by the pandemic.

While the central banks of Botswana and Kenya stood pat in recent weeks, the monetary authorities of Mozambique and, most notably, Nigeria, lowered their benchmark rates. Nigeria’s move surprised market analysts amid the risk of fueling already-elevated inflation. As a whole, policymakers are broadly expected to stay put ahead.

Currency performance across Sub-Saharan Africa was mixed recently. Most notably, the Angolan kwanza’s slide against the USD shows no signs of abating, while the South African rand continued to recoup some of the heavy losses it has taken since the outset of 2020. This year, the majority of currencies in the region are projected to depreciate more sharply than in 2019.

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