Oil exporters Nigeria and Angola are riding out the energy shock while Kenya, Ethiopia and Mozambique face rate hikes and currency pressure, Capital Economics said on September 25.

The London-based consultancy is more upbeat than the consensus on growth in Nigeria, Ghana and, from next year, South Africa. It forecasts that sub-Saharan Africa’s growth will pick up to 4.1% this year from 3.6% in 2025 and reach 4.5% in both 2027 and 2028 as energy prices fall back, while regional inflation eases to 10.1% this year from 14.4% and to 7.7% by 2028.

“Vulnerabilities are concentrated in economies such as Kenya, Ethiopia and Mozambique, where the energy shock is compounding existing fiscal and external pressures. Pressure on currencies and the risk of debt distress could intensify,” Africa economist David Omojomolo wrote in the quarterly outlook, “Africa resilient but pockets of vulnerability remain”.

Second-quarter GDP data showed growth slowing in net oil importer South Africa and speeding up in exporters Angola and Nigeria, the consultancy said. Among energy importers, copper is shielding Zambia and gold is shielding Ghana, but Kenya and Ethiopia have no comparable windfall and are more exposed to balance-of-payments strain.

Tighter global financing adds to the pressure after the US Federal Reserve raised rates by 25 basis points in September, leaving emerging markets diverging from the Fed. Capital Economics expects most African currencies to slip modestly against the dollar over the next few years, with larger falls in Ethiopia and Mozambique, where currencies look overvalued and FX reserves are low. The Fed raised its target range to 3.75-4.00% on September 16.

Nigeria is the consultancy’s standout call. It expects growth of 4.5% this year, 5.0% in 2027 and 5.3% in 2028, above consensus and the country’s strongest run since the 2000s. GDP growth accelerated to 4.4% y/y in 2Q26 from 3.9% in the first quarter, with oil, agriculture and services leading.

Oil output has hovered around 1.5mn barrels per day (bpd) since May, and new offshore investment should bring it closer to President Bola Tinubu’s 2mn bpd target, offsetting some of the hit if oil prices fall towards $70 per barrel by the end of 2027 as Capital Economics expects. The Dangote refinery is containing the fuel import bill, leaving Nigeria’s current account less exposed than Angola’s to a renewed fall in oil prices.

The central bank cut its policy rate by 350bp to 23% in September, its deepest cut since 2007, and Capital Economics expects a further 150bp cut in November, taking the rate to 21.5% by end-2026 and 17% by end-2027, “a much more dovish view than the consensus”. The Central Bank of Nigeria confirms that the September 21-22 meeting reset the policy rate from 26.5% to 23%.

Inflation will peak just below 17% at the end of the year as fuel prices rise, Capital Economics said. A current-account surplus that has helped lift reserves to $55.25bn has supported the naira’s 9% gain against the dollar this year, but the consultancy sees it easing to NGN1,400/$ by end-2027 from around NGN1,326/$ now.

Fiscal policy is likely to remain looser, however. With the presidential election scheduled for January 16, 2027, Capital Economics expects the budget deficit to stay above 4% of GDP.

Angola is also having a bumper year. Capital Economics expects growth of 6.8% in 2026, the strongest since 2012 and above both the government’s 5.57% forecast and the central bank’s 6.15%, as high oil prices lift export receipts by up to 10% of GDP. Official data show GDP expanded 8.74% y/y in the second quarter, with both oil and non-oil activity contributing.

Growth will fall back to 3.5% in 2027 and 3.0% in 2028, Capital Economics said. It warned that the government’s reluctance to save the windfall, including through spending on fuel subsidies, means fiscal risks could re-emerge as oil prices ease and election spending increases ahead of Angola’s 2027 general election. The government has already begun updating the electoral register for that vote.

Ghana’s gold windfall is cushioning its external position. The current-account surplus widened to $3.1bn in the first quarter from $2.4bn a year earlier, according to the Bank of Ghana, driven by strong gold and cocoa export earnings.

Annual inflation was 5.0% in August, not 5.9%, leaving it below the lower edge of the Bank of Ghana’s 8% plus or minus two percentage point target band. Capital Economics expects inflation to remain at or below the bottom of that band in the near term.

The consultancy sees the cedi, which has lost about 10% this year, weakening only modestly to GHS12.0/$ by end-2026 from GHS11.6/$, and growth holding at around 6% in 2027-28, above consensus, helped by the end of debt restructuring after the 2022 default.

Elsewhere, Zambia’s copper rally and an agricultural recovery from the recent drought, part of a wider disaster season, should keep growth above 5%. Côte d’Ivoire is supported by gold and rising oil and gas output, with growth forecast at 6.8% in 2027-28, while Uganda’s first oil is months away, lifting its forecast growth to 7.3% in 2027.

South Africa, by contrast, is taking a knock. GDP contracted by 0.2% q/q in 2Q26 and inflation rose to 4.4% y/y in August, and Capital Economics expects it to top 5% around the turn of the year. Official data confirm the second-quarter contraction and August inflation rate.

It does not, however, expect the South African Reserve Bank (SARB) to follow its 25bp hike to 7.25% in September with more tightening. “We think current market pricing of an additional 50bp of hikes is overdone,” it said, forecasting a first 25bp cut in 2Q27 and a repo rate of 6.25% by end-2027. It sees growth of 1.5% this year and 2.0-2.3% over 2027-28, above consensus, with South Africa’s November 4 municipal elections and next year’s ANC leadership contest among the political risks. The November 4 election date has been formally gazetted.

Kenya is the clearest casualty among the importers. Local fuel prices have risen by 20-30% since the end of February, and the consultancy expects inflation, which reached 6.6% in August, to stay above the Central Bank of Kenya’s 2.5-7.5% target range for much of next year. Official data confirm August inflation at 6.6% and the policy rate at 8.75%.

Capital Economics forecasts a 25bp hike in October from 8.75% and sees the policy rate reaching 9.25% by end-2026 and 9.50% by end-2027. Kenya’s budget deficit hit an estimated 7% of GDP on a 12-month basis in June, and with the August 2027 general election approaching, “consolidation is off the cards”, it said, forecasting government debt to rise to 74.5% of GDP by 2028 from 68.5% this year. Kenya’s electoral commission has set the general election for August 10, 2027.

Coffee and tea export earnings have cushioned the shock, but the shilling looks overvalued in real effective terms and is forecast to weaken to KES135/$ by end-2027 from around KES130/$. Capital Economics sees growth of 4.5% this year and 4.8% in 2027-28, below consensus.

Tanzania is benefiting from stronger tourism receipts but is among the countries where the consultancy expects rate hikes.

Mozambique’s position is “more complicated”. Higher LNG prices support exports, but output is too small to offset dearer fuel imports, while low reserves, large financing needs and mounting debt have pushed it into IMF talks after severe stress in its domestic debt market. S&P classified Mozambique’s local-currency debt as being in selective default in March 2025, while the IMF says debt sustainability still needs to be restored.

Moody’s cut Mozambique to Caa3 on September 18. Capital Economics expects rate hikes, growth of only 2.3% this year and 3.0% in 2027, and said persistently high fuel prices raise doubts about the country’s ability to meet its external debt obligations. IMF staff said after a September mission that Mozambique continued to face significant fiscal and external challenges and that discussions on reforms needed for a new Fund-supported programme would continue.

Ethiopia is among the most exposed, with thin external buffers, the birr trading at a sizeable discount on the parallel market and inflation at 15.1% in August. The National Bank of Ethiopia’s policy rate is currently 16%, and Capital Economics expects it to raise rates by 300bp to 19% by 1Q27.

Separately, Capital Economics warned of “large downside risks” from a possible new civil war.

A strong El Niño also threatens a fresh food price shock, though with a lag. The World Meteorological Organization says El Niño is firmly established and expected to intensify further.

Further out, Capital Economics argues that the energy shock should not derail the region’s expansion. In its base case, stronger exporters and commodity-supported economies should keep regional growth accelerating even as fiscal and external pressures intensify in the most vulnerable importers, with demographics, reforms and commodity investment remaining the main longer-term drivers.