Ghana to Grow at 4.7% In 2021– IMF

The International Monetary Fund (IMF) has revised Ghana’s growth rate upward by a margin of 0.1 percent to 4.7 percent in 2021 in its October 2021 World Economic Report.  The recent forecast is a signal that the Ghanaian economy is recovering gradually from the devastating impacts of the COVID-19 pandemic.

With the current projection, the IMF believes Ghana’s economy will be among the fastest growing economies within the Sub-Saharan African region this year.  The Ghanaian economy, per the recent forecast, will outperform most of its peers as the Fund projects an average growth of 3.4 percent for the Sub-region.  

Despite the upward revision, the recent forecast by the Fund is 0.2 percentage points lower than the latest prediction by the World Bank which expects West Africa’s second largest economy to expand by 4.9 percent in 2021.

Signals of a strong rebound

This notwithstanding, the upward revisions of Ghana’s growth forecasts for the year, continue to reflect the Bank of Ghana’s assertions that the Ghanaian economy is on a rebound with a sustained momentum.  

In its September 2021 Monetary Policy Committee Report, the Bank of Ghana highlighted that its update of the Composite Index of Economic Activity (CIEA) for July 2021 reflected continued recovery in domestic economic activity.

The real CIEA recorded a 20.0 percent year-on-year growth in July 2021, marginally lower than 20.2 percent recorded in June 2021, but very much above the 3.9 percent growth observed in July 2020. The growth in the indicators, according to the BoG, were somewhat broad-based with port activity, imports, domestic VAT, and air-passenger arrivals accounting for the increase.

In the new report, the IMF also expects the Ghanaian economy to continue its strong growth trajectory in the medium-term, starting with a 6.2 percent expansion in 2022.  With this estimate, it implies that the IMF anticipates a stronger growth for Ghana next year than its sister Bretton Woods Institution, the World Bank, which forecasts 5.5 percent GDP growth for the country in 2022.  

Expectations of the Government

The recent forecast by the IMF and the latest projections by the World Bank, even though demonstrating a bright future for the country’s recovery, remain below the expectations of the Government of Ghana. The Government now expects the economy to expand by 5.1 percent in 2021 after reviewing developments in both the domestic and global economies in the first half of the year. Based on the assessment, the government revised its growth forecast upward by 0.1 percentage points, from an earlier forecast of 5.0 percent in March 2021. 

Government’s growth expectations are also higher than that of Fitch Solutions which maintained in August that Ghana’s economy will expand by 4.8 percent in 2021.

The Ghanaian economy continues its recovery in 2021 after it narrowly escaped recession in 2020 with a sluggish growth of 0.4 percent. 

In the first quarter of 2021, the economy expanded by 3.1 percent and continued its strong rebound into the second quarter, expanding 3.9% according to provisional figures from the Ghana Statistical Service.  The second quarter growth anchored heavily on expansions in the agriculture and services sectors of the economy despite a 4.3 percent contraction in the industry sector.

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