Frontier Markets Weekly, February 4th 2023

African growth falters | Bangladesh gets IMF loan | Lebanon devalues currency | Peru protests undermine economy

 By Dan Keeler, Ken Stibler, and Noah Berman 

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Growth stalls in Africa’s biggest economies. Domestic political and economic headwinds are expected to threaten growth in South Africa and Nigeria this year, according to a report by economic research firm Capital Economics.

In South Africa, a burgeoning energy crisis threatens to make blackouts more common, while the state-owned public utility Eskom sinks further into debt. Frequent load shedding has dented the country’s economic output; South Africa’s mining industry output declined for the fourth straight month in November, and its manufacturing industry failed to rebound from a steep October dropoff.

Electoral commission staff assess damage after an attack in Abeokuta, Nigeria. Photo: INEC/AP

Meanwhile, the prospect of violence has threatened to derail Nigeria’s elections planned for the end of this month, The Guardian reports. Fifty attacks against the country’s electoral commission have been recorded since the last election in 2019. The country recently revealed that GDP growth slowed in the third quarter of last year, and weaknesses persist in both the oil and non-oil parts of the Nigerian economy, according to Capital Economics.

Pope tours DRC and South Sudan. Pope Francis arrived in the Democratic Republic of Congo on Monday, the first stop in his six-day tour of the continent that also includes a stop in South Sudan.

Celebrating mass with over one million people in the DRC, where nearly half of the population of 95 million is Catholic—meaning there are more Catholics in the DRC than in Italy—the pope railed against exploitation by wealthy countries, calling for foreign interests to take responsibility for economic “enslavement” of Congolese people, the Associated Press reports. Francis’ is the first papal visit to the DRC since Pope John Paul II stopped in the country in 1985.

Pope Francis with DRC President Felix-Antoine Tshisekedi Tshilombo in Kinshasa on Tuesday: Photo: Gregorio Borgia/AP

In South Sudan, Francis is expected to call for an end to the violent conflict that has embroiled the young nation since its inception just over a decade ago. Many South Sudanese are hopeful that the papal visit can restore unity in the country, France24 reports.

Rome reaffirms Libya partnership with gas deal. Italian Prime Minister Giorgia Meloni finalized an $8 billion gas deal with Libya’s internationally recognized government in Tripoli, continuing Rome’s push to diversify energy suppliers across Africa. The agreement allows for Italy’s Eni and Libya’s National Oil Corporation to develop two offshore gas fields, which are expected to come online in 2026.

  • Italy’s energy deal in Libya criticized as ‘pomp and ceremony’. (Middle East Eye)

While in Tripoli, Meloni also held talks with Libyan Prime Minister Abdul Hamid Dbeibah on migration which has become a resurgent issue for European countries with direct exposure to common migration patterns from conflict-affected countries in Africa and the Middle East.


IMF approves near-$5b loan for Bangladesh. The IMF has approved a $4.7 billion funding package on Monday, clearing the way for disbursements to begin. Bangladesh will be the first Asian country to secure a loan under the IMF’s new Resilience and Stability Facility, a financing option for vulnerable economies.

$3.3 billion of the loan will be disbursed through the IMF’s traditional venues, with $1.4 billion under the RSF. The executive board approval will greenlight the immediate disbursement of $476 million, the IMF said.

A man sells vegetables while garment workers leave a factory in Dhaka. Photo: Reuters via Nikkei Asia

Disbursements will continue over the next three-and-a-half years under a program that aims to “preserve macroeconomic stability, protect the vulnerable, and foster inclusive and green growth,” according to an IMF press release. Meanwhile, funding from the RSF is expected to support the country’s climate change resilience and adaptation efforts, the IMF said.

Bangladesh is the first South Asian country to win IMF funding this year. Both Sri Lanka and Pakistan reached staff-level agreements with the IMF in 2022, but neither country has unlocked funding.

Pakistan seeks bailout as economic woes continue. An IMF delegation arrived in Pakistan on Tuesday, with the country hoping to unlock a $1.1 billion disbursement that has been stalled since November. As part of its negotiations with the IMF, Islamabad eliminated an artificial exchange rate for its currency and hiked fuel prices. The rupee quickly fell 15% to a record low.

People warm themselves during a nationwide power outage, in Muzaffarabad on January 23, 2023. Photo: Sajjad Qayyum, AFP/Getty Images

Following months of turmoil, Pakistan’s economy has reached the brink of collapse. Nationwide power outages plunged the country into darkness last week and caused millions of dollars of damages to the country’s textile industry, its largest export sector. Islamabad’s foreign reserves have fallen to $3.7 billion, enough to cover only three weeks of imports, Dawn reports

As the country’s economy threated to implode, a suicide bomber attacked a mosque in the Northwestern city of Peshawar on Monday, killing over 100 people and raising concerns of the return of Taliban-linked terrorism.

Myanmar extends state of emergency. Myanmar’s ruling military junta announced on Wednesday it would extend by six months the state of emergency that has been in place since the army took power in a February 2021 coup. Wednesday marked the second anniversary of the coup.

The move is expected to delay elections that generals said would be held by August of this year as an election cannot be held during the state of emergency. Analysts have denounced the proposed elections as theater that is unlikely to result in regime change, Al Jazeera reports.

‘Wanted’ posters featuring the junta leader Min Aung Hlaing are seen during a protest outside Myanmar’s embassy in Tokyo on Wednesday. Photo: AFP via Bangkok Post 

The US State Department condemned the extension for “prolonging the military’s illegitimate rule and the suffering it inflicts upon the country.” State Department spokesperson Ned Price said the United States would support pro-democracy movements in Myanmar and work to deny international credibility for the military regime.

Under pressure from their governments, major Western companies including Chevron, TotalEnergies and Woodside Petroleum have announced in recent months that they will exit Myanmar.

Southeast Asia prepares to welcome Chinese tourists. As China relaxes its Covid-19 restrictions, Southeast Asian economies are preparing for an influx of tourists. 

Before the pandemic, Chinese tourists made up a quarter of all visitors to ASEAN nations, The Diplomat reports. China sent more tourists abroad than any other country in 2020, and Chinese tourists spent $277 billion abroad in 2018, according to a UN World Tourism and China Tourism Academy study.

Tourist favorites, such as this night market in Chiang Mai, Thailand, have been hit hard as Covid restrictions cut visitor numbers. Photo: Depositphotos

With Chinese tourists able to leave the country with few restrictions for the first time in nearly three years, analysts expect tourism to nearby destinations to be the first form of international travel to return, the New York Times reports. While the USAustralia and some members of the EU have announced Covid requirements for travelers coming from China, VietnamThailandIndonesiaCambodia and Malaysia have abstained from such restrictions.

Middle East

Saudi Arabia pushes to grow tourism sector. Saudi Arabia’s effort to diversify its economy got a boost last year with a near-100% surge in tourism revenue, Arab News reports. According to tourism minister Ahmed bin Aqil Al-Khatib, tourists spent 185 billion riyals ($49 billion), up from SR95.6 billion in 2021.

Tourism remains a small part of Saudi Arabia’s economic mix, representing just 3.2% of GDP, but the government is reportedly hoping to attract 100 million tourists a year by 2030, up from 67 million in 2021.

The skyline of Saudi capital Riyadh. (AP)

As part of its drive to attract more visitors, the Kingdom’s tourism ministry last month moved to allow citizens to rent out their homes to tourists, Al Arabiya reports. The new rule could open the door for home-share services such as Airbnb to set up in Saudi Arabia. 

Lebanon devalues official exchange rate by 90%. Lebanon devalued its currency by 90% this week in an effort to fulfill promises made as part of a deal with the IMF to shore up its crumbling economy, the FT reports. But while the country’s central bank said it was aiming to unify its multiple exchange rates, the sharp devaluation to L£15,000 to the dollar left the official rate far higher than the roughly L£64,000 unofficial rate.

The devaluation leaves the official rate far higher than the black market rate. Photo: Mohamed Azakir/Reuters

Lebanon is struggling with a long list of challenges, including runaway inflation, political instability, a financial sector facing steep losses and desperately in need of reform, exacerbated social tensions and energy shortages. Capital Economics, a London-based consultant, says the devaluation is a step in the right direction but it “barely scratches the surface of the problems that officials need to tackle.”

In a September 2022 report following a visit to Lebanon, the IMF’s Ernesto Rodrigo said much more reform and action would be needed before new funds could be unlocked. Highlighting the country’s dire economic straits, he added, “public sector institutions are failing and basic services to the population have been drastically cut. Despite the urgency for action [progress]remains very slow.”


Go deeper: Read the full stories at

Russia and Iran have connected their interbank communication and transfer systems to help boost trade and financial transactions in a new effort to fight Western sanctions. Linking their financial systems will allow Tehran and Moscow to coordinate sanctions avoidance and take advantage of holes in national sanctions regimes that affect each differently.

TurkeyHungaryBosnia and Herzegovina and Serbia got their worst corruption scores in 10 years in the latest Global Corruption Perceptions Index. Governments undermining democratic processes, cracking down on civic space and restricting media freedoms is fueling a vicious circle of corruption and authoritarianism, according to Transparency International, which publishes the index. 

The economies of Central and Eastern Europe have proved more resilient to shocks from the Russia-Ukraine conflict than initially expected, according to the Vienna Institute for International Economic Studies’ Winter Forecast. While growth will be significantly lower than in 2022 in almost all countries, only Russia, where GDP is expected to shrink by 3%, and Hungary with a decline of 1%, will experience full-year contractions. 

Go deeper: Read the full stories at

Latin America

As major powers abandon Haiti, a coalition of the willing emerges across Latin America. Jamaica and El Salvador have offered to send support to Haiti to bolster the nation’s struggling national policy. The offers come as the US and Canada have refused to commit troops for a multinational security force despite the government’s plea for foreign intervention to fight the gangs that have effectively taken control of the capital.

La Saline district in Port-au-Prince, Haiti. Photo: Fernanda Pesce/AP

Last week, Haiti’s interim Prime Minister Ariel Henry attended the Community of Latin American and Caribbean States summit in Buenos Aires in hopes of convincing countries in the region to be part of a specialized multinational force to help his struggling Haiti National Police. While the region’s bigger countries shied away from offering direct support, Jamaica’s prime minister said his government is willing to send soldiers and police officers to Haiti as part of a multinational deployment. El Salvador, which has seen success with controversial tactics against gangs, also offered to lend senior officials as consultants.

In an interview discussing the proposal with the Miami Herald, Salvadoran Vice President Félix Ulloa said of solutions for Haiti that “It doesn’t come from Canada…it comes from a sister country; it comes from a country that has almost the same features as Haiti.”

Politics weighs on growth as Peruvian protests halt key sectors. Political upheaval in Peru is battering industries that have long powered one of Latin America’s fastest-growing economies. While prior political upheaval failed to dent the mining and tourism-driven economy, current anti-government protests are undermining the country’s reputation as a stable investment destination, the WSJ’s Ryan Dube reports.

Trucks backed up last week by the border blockade. ‘If this continues we might even experience a recession,’ a former finance minister said. Photo: Claudia Morales/Reuters

The protests against President Dina Boluarte’s regime stem from deep seated social divides, corruption and longstanding political stagnation. The protests and riots hitting transportation and mining infrastructure have forced firms to halt operations in the world’s second biggest copper exporter. The tourism industry is also suffering, leaving thousands of people without work while food and fuel prices surge

Costs from damage to infrastructure and lost production could amount to about $1.3 billion, the government says. The Lima Chamber of Commerce estimates that 1.1 million jobs could be lost and the former finance minister Alonso Segura projected a recession if the protests continue.

Since she made the commitment at the World Economic Forum in Davos last week, Veléz has been undercut in separate statements by the ministers for public credit and finance who suggested the decision could be reversed. Veléz later confirmed that canceling existing contracts was not being discussed but the country’s President Gustavo Petro also reaffirmed his government’s commitment to move away from fossil fuels and focus on renewable energy and boosting tourism.


IMF raises global outlook. The IMF upgraded its outlook for the year on Monday, saying that it still expects the global economy to slow, but that it will likely avoid a recession. The multilateral highlighted resilient US consumer spending and an economic rebound from China’s reopening as reasons for its upgrade. While it expects central banks to continue raising interest rates, the fund sees inflation peaking in the near term. 

The IMF projected global economic output growth to shrink to 2.9% in 2023 from 3.4% last year, before bouncing back to 3.1% in 2024. It expects inflation to fall to 6.6% this year from 8.8% last year, and to decrease further to 4.3% in 2024.

IMF data show inflation across a basket of emerging and developed economies appears to have peaked. Source: IMF, Haver Analytics

The projections mark an about-face for the international lender, which said in October that one-third of the world’s economy could be in a recession this year. It also contrasted with a recent downgrade in outlook from the World Bank, which predicted three weeks ago that growth would shrink to 1.7% this year as part of a long-lasting slowdown that would hammer low-income countries.

What we’re reading

Nigeria sees cash shortage amid push for redesigned currency. (AP)

Mali defends Russian ties and opposes options for UN force. (AP)

Ethiopia: Abiy’s pick for bank governor faces spiraling inflation and shrinking reserves. (The Africa Report)

Uganda’s central bank asks investors to switch bonds due April. (Reuters)

Russian forces help three nations protect Central African gold resources. (Bloomberg)

Power crisis triggers water cuts in South Africa’s economic hub. (Bloomberg)

Libya human rights abuses must be addressed, says UN probe. (UN)

Tunisia sees dismal turnout in runoff vote for tamed parliament. (Bloomberg)

A pro-Russian social media campaign is trying to influence politics in Africa. (NPR)

US and Philippines strike military-base deal. (WSJ)

Myanmar economy to grow 3%, but far less than 2020: World Bank. (Nikkei)

US arms left in Afghanistan are turning up in a different conflict. (NBC)

Mongolia reels from impact of Russian sanctions. (FT)

Turkey to buy 1.4b cubic meters of gas per year from Oman. (TRT World)

Turkey’s Erdogan sees popularity surge after boost in spending. (Middle East Eye)

Attack on Iran raises tension as Blinken visits Israel’s PM. (Bloomberg)

French forces seize Iranian-supplied weapons bound for Yemen. (WSJ)

Hungary will walk a fine line in the aftermath of its credit downgrade. (FrontierView)

Ukraine to get cold shoulder on rapid EU entry. (Politico)

EU urges Bosnia to end visa-free regime for Russians. (Radio Free Europe)

Russia boosts China trade to counter Western sanctions. (WSJ)

Illegal surveillance cameras in Albania fuel concerns over gangs’ power. (BalkanInsight)

Cyprus picks new president amid economic doubt and an ethnic split. (AP)

Azerbaijan and Hungary extend energy cooperation. (Caspian News)

El Salvador opens 40,000-person prison as arrests soar in gang crackdown. (Reuters)

Corruption rife across Latin AmericaGuatemalaNicaragua ‘reach all-time lows.’ (Reuters)

Venezuelans fear new bill will put stranglehold on civil society. (The Guardian)

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