Africa’s potential growth hotspot and unsettling monetary environments

LAGOS (Capital Markets in Africa) – The Q4 GDP figures suggest the rifle is cocked and the Senegalese economy is ready to shoot the lights out this year. Industry ended 2022 with a bang and the development of the hydrocarbons sector could see Senegal become Africa’s growth hotspot in 2023. Domestic political uncertainty and economic challenges abroad are the main obstacles to traverse. Elsewhere, both Namibia and Algeria are still struggling with unsettlingly high price inflation, while ongoing disinflation has allowed Zimbabwe to loosen monetary policy further. However, with inflation at nearly 90% and the policy rate at 140%, the Zimbabwean monetary environment is in itself rather unsettling.

Algeria: Slight uptick in inflation in February
Consumer price index (CPI) inflation was 9.6% y/y in February. While the annual print is up only marginally from the figure the previous month, m/m inflation was worryingly high at 1.5%. As in other countries in the region, food price inflation is the main driver of the increase in the overall price level.

Namibia: Inflation stuck at near-six-year high
The latest consumer price index (CPI) print for Namibia shows that inflation remained unchanged at an elevated level of 7.2% y/y in March, as higher food prices offset lower price pressures elsewhere in the consumer basket. As a result, the average inflation rate for Q1 2023 was 7.1% y/y – the highest since Q1 2017.

Senegal: Strong economic end to 2022 a sign of things to come
A strong end to Senegalese economic activity in Q4 resulted in annual GDP growth of 4.0%. While much weaker than the previous year’s growth of 6.5%, the details of the Q4 figures portend a stellar economic performance in 2023. The country’s hydrocarbons sector continues to take shape and will push growth to around 7.0% this year. The main risks stem from domestic political developments and expectations of recessions in major advanced economies.

South Africa: Powerless economy propped up by policy promises and investment pledges
Receiving almost R310bn in investment pledges can probably be seen as an achievement when a country faces an electricity shortfall of 6,000 megawatts. That amount, however, does little to address South Africa’s growth problem, which is structural in nature, and for which there is no quick fix.

Zimbabwe: Policy rate reduced as price inflation moderates
Zimbabwe’s annual inflation rate has continued to moderate since Q4 2022, coming in at 87.6% y/y in March and thereby paving the way for further policy easing by the Reserve Bank of Zimbabwe (RBZ). Meanwhile, the consumer price index (CPI) was little changed at 0.1% m/m in March, with just over half of the CPI sub-indices up on a monthly basis.

Source: Oxford Economics