The research arm of Standard Bank Group, Standard Bank Research, has projected that Ghana will experience a strong rebound this year with growth estimated at 6.4 percent of the country’s Gross Domestic Product (GDP).
According to the Research team of the Bank, the strong growth forecast for the year is based on a lower than expected growth in the second quarter of 2021 which will likely make the base effects favorable in 2022.
However, Standard Bank Research warned that any imposition of restrictions later in the year due to the new COVID variant may pose a major risk to the strong growth projections.
“Thus, we see GDP growth increasing to 6.4% y/y in 2022. We’ve turned more cautious on the FDI outlook for the oil and gas sector over the coming year. Also, the outlook for the gold sector still doesn’t look promising over the coming year after a key mine was closed due to an accident in May. However, we still see renewed public health restrictions as the most notable downside risk to our growth outlook for 2022”.
Standard Bank Research
Standard Bank Research forecasts a strong first quarter growth of 6.5 percent for Ghana this year and is expected to remain stable till the third quarter. Standard Bank’s estimates put 2021 growth at 4.3 percent which is lower than the Bank’s earlier forecast of 7.3 percent in May last year.
Balance of payments
On the country’s balance of payment, Standard Bank indicated that it expects the current account balance to widen to 3.2 percent in 2022. According to the Bank, the current account balance was 4.7 percent in 2020 and was projected at 2.9% of GDP in 2021.
“Exports will likely be boosted by rising cocoa production, oil receipts and improvements in service exports (off a low base). But gold exports are likely to disappoint due to production disruptions”.
Standard Bank Research
Ghana far from fiscal ease
With regards to meeting the country’s fiscal responsibility commitments, a report issued by the Standard Bank Group, parent company of Stanbic Bank Ghana, highlighted that Ghana may have to wait till 2024 to return to its deficit threshold of 5%. However, the bank said this is not an isolated case as most African economies are projected to see fiscal consolidation between two and four years from now.
“The path to fiscal consolidation may take a further four years as the government does not expect to return to within the Fiscal Responsibility Act threshold of 5% of GDP until at least 2024. In fact, most African economies foresee some two to four years to fiscal consolidation given the disruption to economic activity and consequent impact on government revenues amid rising social costs. However, fiscal consolidation faster than that would be desirable given high interest payments and debt service costs”.
Standard Bank Group
The report further noted that improvement in Ghana’s fiscal consolidation will depend largely on how the country recovers from the shocks of COVID-19.
Debt and IMF bailout
On Ghana debt levels, the report noted that though Ghana’s debt may seem sustainable, albeit with high risk of debt distress, the fast pace of growth of external commercial debt over the past few years calls for caution.
“Moreover, commercial creditors, including Eurobond creditors, now account for near 50% of the external debt composition, underscoring debt investors’ sustainability concerns”.
Standard Bank Group
Meanwhile, Standard Bank Group listed Ghana among five of Africa’s heavily-indebted countries —Ghana, Kenya, Angola, Ethiopia and Zambia — that are about to experience serious debt risks this year and beyond.
Ghana’s debt risk is being fueled by the country’s deteriorating public finances. In an article, Bloomberg quoted Jibran Qureishi, head of African research at Standard Bank Group, to have said that Ghana will probably need an IMF bail-out to be able to restore confidence in investors.
On the contrary, the Country Representative of the International Monetary Fund, Dr. Albert Touna Mama, stated earlier this week that the present state of Ghana’s economy does not require an urgent economic programme from the Fund.
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