Vetiva: SSA inflation to trail global development

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.