Ghana’s economy is likely to see a boost despite the risk factors usually associated with fiscal behaviour in election year, Economic analysts at Standard Bank, parent company of Stanbic Bank Ghana, has predicted.
The prediction was contained in the January 2020 edition of the African Monthly Report (AMR).
According to the report, GDP was expected to hit 6.9 per cent in 2020, accelerating to 7.4 per cent in 2021.
“We forecast GDP growth of 6.9 per cent y/y in 2020, accelerating to 7.4 per cent y/y in 2021, from what we estimate was 6.1 per cent y/y growth in 2019,” the report said.
The accelerated growth, the report indicated, would be provided by the export-oriented sectors of the economy, which was also likely to be the main propeller of growth in the next two to three years.
“We maintain our constructive view regarding the economic growth outlook for Ghana in the medium term. We continue to highlight the probable boost that the export-oriented sectors of the economy will likely provide to overall economic growth over the course of the next 2-3 years,” the report said.
While things look quite good for the Ghanaian economy in 2020, one area the report foresees a deceleration in was the mining and quarrying sector.
The January AMR pointed out that the downward trend in growth experienced in the sector in 2019 was expected to continue in 2020 with the mining sector being the main culprit although the opening of the Obuasi gold mine was likely to provide some support for the sector.
The report stated that, “While up to now the deceleration in growth of the mining and quarrying sector has not been attributable to the oil sector, there is a risk that this sector might decelerate this year. Given that the oil sector grew strongly in the first three quarters of 2019, mining was likely the main culprit in the deceleration of the mining and quarrying sector.”
Commenting on the performance of the local currency this year, the AMR said that the depreciation of the Ghana Cedi was inevitable.
The report predicted that the local currency would end at GH?5.85 to a dollar in the first quarter and at GH?6.00 to the dollar at the end of the second quarter.
“Depreciation seems inevitable this year; the only question is the magnitude. We expect USD/GHS to end Q1:20 at 5.85 and Q2:20 at 6.00. In recent months, the BoG has been steadfast in intervening to restrain the depreciation trend. Just as last year, it is likely that the BOG will rely on government issuance of Eurobonds to provide it with the ammunition to intervene in the forex market,” the report stated.
The African Markets Reveal is a monthly report issued by the Standard Bank Group, parent company of Stanbic Bank Ghana and focuses on the economic and financial outlook of African countries.
The report also reviews current economic situations and makes short to medium term predictions about the economies of African countries.