Overview
July marked the beginning of a generally positive outlook for the second half of the year (H2 2023) based on the analysis of the change in Gross Domestic Product (GDP) Growth, Inflation Rate, Interest Rate, and Unemployment Rate in our focus countries over the past month.
GDP:
Egypt still has not updated its figures (since Q4 2022). Impressive results are not expected as its economic crisis continues to worsen despite the $3billion loan from the International Monetary Fund (IMF) and the approval of its $97.41billion 2023-2024 budget. The top 3 contributors to its GDP, based on their previous report, were Manufacturing ($10.1billion), Agriculture ($9.2billion), and Construction ($4.3billion).
Ghana has not updated its figures (from Q1 2023). However, similar improvement between Q4 2022 and Q1 2023 (3.7% to 4.2%) is expected, but may not be as significant. The improvement in Q1 2023 was due to a boost in revenue from Services; coming from a weak performance in Q4 2022. The top 3 contributors to its GDP, based on their previous report, were Services ($1.9billion), Agriculture ($900million), and Construction ($500million).
Kenya has not updated its figures (from Q1 2023). It is expected to continue on its growth trajectory despite the surprising YOY decline (6.2% to 5.3%) between Q1 2023 and Q1 2022. This was largely blamed on the weak performance of Construction and Manufacturing. Nevertheless, 5.3% in Q1 2023 was big improvement from 3.7% in Q4 2022. The top 3 contributors to its GDP, based on their previous report, were Agriculture ($3.3billion), Transportation ($1.6billion), and Manufacturing ($1.4billion).
Morocco has not updated its figures (from Q1 2023). Its impressive growth since Q1 2023 (3.5% from 0.5% in Q4 2022) fueled by the boom in income from its Tourism subsector is expected to continue; especially as April and May were impacted. The top 3 contributors to its GDP, based on their previous report, were Services ($17.4billion), Manufacturing ($4.4billion), and Public Administration ($3.4billion).
Nigeria has not updated its figures (from Q1 2023). Despite the decline from 3.5% in Q4 2022 to 2.3% in Q1 2023, significant growth is expected due to recent economic decisions, like the currency float and subsidy removal. That decline was due to the cash crunch that hampered domestic growth, and oil theft that hampered foreign exchange inflows. The top 3 contributors to its GDP, based on their previous report, were Services ($9.7billion), Agriculture ($5.0billion), and Manufacturing ($2.3billion).
Inflation:
Most African countries have been battling inflation, just like other countries around the world. It may be to varying degrees, but it is the common denominator.
Inflation in Egypt increased by 300 bps to 35.7% in June. The value for July 2023 has not been released. Egypt had the most significant rise in the group again; having risen by 210 bps in May.
Ghana increased by 60 bps to 43.1% in July. It rose to 42.5% in June (from 42.2% in May).
Kenya declined by 60 bps to 7.3% in July. This comes after being stagnant at 7.90% for the prior 11 months [with the exception of May (8%)].
Morocco declined by 160 bps to 5.5% in June. The value for July 2023 has not been released.
Nigeria increased by 38 bps to 22.79% in June. The value for July 2023 has not been released.
Interest:
Higher interest rates continue to be the only solution being implemented by most African central banks in response to rising inflation.
The Central Bank of Egypt maintained the interest rate at 18.25% in July. However, the rate was recently increased by 100 bps to 19.25% for August.
The Bank of Ghana increased the interest rate by 50 bps to 30% in July. The same rate is currently being maintained for August.
The Central Bank of Kenya maintained the interest rate at 10.50% in July. The same rate is currently being maintained for August.
The Bank Al-Maghrib of Morocco maintained the interest rate at 3.00% in July. The same rate is currently being maintained for August.
The Central Bank of Nigeria increased the interest rate by 25 bps to 18.75% in July. The same rate is currently being maintained for August.
Unemployment:
Unemployment rates have not been updated across board, with the exception of Morocco whose unemployment rate declined from 12.9% in Q1 2023 to 12.4% in Q2 2023. Its youth unemployment rate also declined from 35.3% in Q1 2023 to 33.6% in Q2 2023. Being mindful of the level of innovation happening across the continent, the rate of job creation and decline in unemployment is most likely very similar in all focus geographies, especially for youth.
