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Africa Economy in November 2013

Source: OPEC 11/29/2013, Location: Africa

South Africa’s manufacturing PMI had improved marginally last month after a sharp fall in September. The index rose to 50.7 from 50.0 in the previous month. The modest recovery came after the index fell to an eight-month low in September as a strike in the auto sector hurt new sales orders. The index is still remained below the average reading of 52.7 for the 3Q13. It is expected that conditions will remain restrained as some labour disputes from September spilled over into October. Further strikes by mining and construction workers are possible in the coming few weeks. Gold companies last month reached a wage pact with all labour groups except the Association of Mineworkers and Construction Union which represents 19% of miners.

To help accelerate growth in East Africa’s biggest economy, Kenya plans to spend as much as $15 billion in boosting electricity production fourfold over the next 40 months, according to Kenya’s energy ministry. To support double-digit growth, it is estimated that Kenya needs to increase its power capacity to more than seven thousands megawatts from its existing capacity of around 1,700 megawatts. The country is preparing to sell its inaugural Eurobond to raise as much as $2 billion by early next year to fund infrastructure development.

Ghana’s economy will expand 7.2% y-o-y, less than the previous estimate of 7.9%, according to official figures. This will limit the government’s ability to narrow its budget deficit. The targeted budget gap is of 9.2% of GDP this year and 6% next year. GDP is expected to grow at a faster pace in 2014. The government expects tax revenue to grow next year as business investments expand which will allow for notably reducing the budget deficit. Ghana’s credit rating was cut last month by Fitch Ratings after rising government wages and falling revenue from gold prevented the government from narrowing the budget gap to its 9% target. The deficit had ballooned to 12.1% last year because of increases in public sector wages, which consume about 70% of tax revenues. Ghana slashed subsidies on fuel, water and power to curb the budget deficit this year. While the removal has cut government spending, the impact of the higher prices is being passed on through inflation, which quickened to 11.9% in September, the fastest pace all year.

Last month’s data signalled a return to output growth in Egypt’s non-oil producing private sector, ending a 12-month period of contraction. Egypt’s manufacturing economy edged close to stabilization in October with the headline PMI posting 49.5, up from September’s 44.7. While operating conditions have now deteriorated for 13 straight months, the latest rate of deterioration was the weakest since last November. The survey showed a prolonged decline in new orders, though at the slowest pace in almost a year. New business from abroad also fell at a weaker rate. The survey also showed an ease in job shedding among Egypt’s manufacturers last month.

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