What to expect from SSA economies in H2 2020

A recent report by Vetiva Capital has shed light on what to expect from Sub-Saharan African (SSA) economies in the second half of 2020. The report indicates a challenging outlook for these economies due to their reliance on commodity exports, portfolio inflows, remittances, and Official Development Assistance. The depletion of reserves in these countries could lead to further currency depreciations, while those linked to key commodity exports might find some relief as trade picks up in the latter part of the year. Mosope Arubayi, an Economist at Vetiva, joined CNBC Africa to discuss the findings of the report. Despite the challenging circumstances, Arubayi expressed cautious optimism for the region's economic prospects in the coming months. One of the key themes highlighted in the report is the impact of external factors on SSA economies. Depletion of reserves could trigger currency depreciations, causing further strain on already vulnerable economies. On the other hand, countries linked to key commodity exports could see a slight improvement in their currency value as global trade starts to recover. Three key points emerge from the interview. Firstly, the report underscores the vulnerability of SSA economies to external shocks due to their reliance on specific sectors and external funding sources. Second, Arubayi mentions the potential for currency fluctuations in various countries, with some likely to face depreciations and others possibly experiencing slight gains. Finally, the economist highlights the importance of monitoring inflation rates across the region, noting that different countries are experiencing varying levels of inflation in the current economic climate. Commenting on the findings, Arubayi stated, "We have countries like South Africa and Kenya recording inflation in Q2, but prices locally show an increase as well. It's essential to monitor these dynamics closely to understand the overall impact on the economy." This statement captures the nuanced challenges facing SSA economies and the need for careful monitoring and strategic planning moving forward. The report also touches on the potential implications for inflation rates in North Africa and the Indo-Pacific region. While countries like South Africa and Kenya have recorded inflation in the second quarter, the import costs have risen, impacting local prices. This nuanced interplay between global and local economic factors underscores the complexity of the economic landscape in the region. In conclusion, the report by Vetiva Capital provides valuable insights into the economic outlook for SSA economies in the second half of 2020. With a focus on currency fluctuations, inflation rates, and external dependencies, the report serves as a comprehensive analysis of the challenges and opportunities facing the region. As countries navigate the uncertain economic terrain ahead, strategic planning and proactive measures will be crucial to mitigating risks and fostering sustainable growth.