Vetiva: SSA inflation to trail global development
A report by Vetiva Research says it expects inflation in Sub Saharan Africa to follow global trends this year, citing uncertainties around on-going geopolitical tensions. Vetiva also expects SSA growth to be at 3.7 per cent this year. Angela Onotu, an SSA Economist at Vetiva Research, joins CNBC Africa to unpack the report.
Fri, 20 Jan 2023 15:04:29 GMT
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AI Generated Summary
- Sub-Saharan Africa's inflation and growth are expected to be influenced by global pressures, with energy prices and climate-related shocks playing significant roles in driving inflation levels in countries like Nigeria and Ghana.
- Nigeria's economic landscape is set to witness growth driven by the recovery of the oil and gas sector and industrial expansion in 2023, supported by improved oil production and favorable oil prices.
- Currency dynamics in Nigeria, particularly the Nigerian Naira, are projected to experience a mix of depreciation at the official market and appreciation at the parallel market, with factors such as oil production gains and subsidy removal playing crucial roles in shaping the currency's direction.
A recent report by Vetiva Research has shed light on the economic outlook for Sub-Saharan Africa in 2023, predicting that the region's inflation and growth will be heavily influenced by global trends and ongoing geopolitical tensions. Angela Onotu, an SSA Economist at Vetiva Research, provided insights into the report during an interview with CNBC Africa. Onotu emphasized that uncertainties surrounding energy prices and climate-related issues are expected to drive inflation in the region, particularly in countries like Nigeria and Ghana. In Nigeria, factors such as climate change-induced flooding in 2022 and the potential removal of subsidies later in the year could lead to an uptick in inflation. However, the first half of the year may see moderate inflation levels, driven by high-based effects. In Ghana, inflation is projected to moderate, with the IMF deal likely to support economic growth and stabilize the currency. On the growth front, Vetiva Research anticipates a positive trend in Nigeria, with a focus on the oil and gas sector's recovery and industrial sector expansion. Improved oil production and sustained high oil prices are expected to drive growth in 2023. Additionally, the Nigerian Naira (NGN) is forecasted to depreciate at the official market due to perceived overvaluation, but appreciate at the parallel market supported by increased oil production and prices. The potential removal of subsidies could also impact the currency's direction. Overall, Vetiva Research's report paints a complex yet cautiously optimistic picture of Sub-Saharan Africa's economic trajectory for the year, highlighting the need for proactive policy measures and resilience in the face of global challenges.
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