Ghana to grow by 5.5% of GDP in 2022, says the World Bank
The World Bank, according to its latest Africa Pulse Report, has projected a 5.5% expansion of the Ghanaian economy this year.
The expansion of the economy is however, projected to slow down to 5% in 2024.
The Bretton Wood institution in its report asserts that, higher commodity prices are projected to support the country’s recovery in the extractive sectors and boost exports and fiscal revenues helping to ease some pandemic induced fiscal pressures and external financing needs.
Despite the positive growth projection by the World Bank, the Bank expressed worry over the debt management problems still facing the country.
“In Ghana, the economy is projected to pick up pace in 2022, growing by 5.5%, then slowing gradually to 5% in 2024, lower than the pre-pandemic average growth, which was around 7%. This moderate performance reflects debt management problems that are still looming on the economy, with few prospects for improvement.”
“Additionally, Ghana, Ethiopia, Malawi, and Mozambique fell short of replicating the success of most non-resource-rich countries in part because of elevated debt levels, and in some cases insecurity. In Ghana and Malawi, the disappointing performance underscores the poor management of public finances and, the need for significant growth enhancing reforms”, the Bank said.
The World Bank also commented on the Electronic Transaction Levy (E-levy) whose implementation will take off from May 1, saying that, though the tax is expected to increase the tax base by generating about $1.1 billion in revenue, these efforts are not enough to address the country’s debt sustainability problems.
“To return to its pre-pandemic consolidation trajectory, the Government of Ghana proposed reforms that promote fiscal and debt sustainability. After resistance from the opposition, the Parliament approved the E-levy tax of 1.5% on digital transactions. The proposed tax is expected to increase the tax base by generating US$1.1 billion in revenue in 2022. Nevertheless, these efforts are not enough to address the country’s debt sustainability problems,” it noted.
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SSA growth to slow to 3.6%
The World Bank estimates growth at 3.6 percent in 2022, down from 4 percent in 2021 for Sub-Saharan Africa as the region continues to deal with new COVID-19 variants, global inflation, supply disruptions and climate shocks.
Adding to the region’s growth challenges are rising global commodity prices, which are increasing at a faster pace since the onset of the conflict between Russia and the Ukraine.
As top world exporters of food staples, Russia—the world’s largest exporter of fertilizers—and Ukraine account for a substantial share of wheat, corn and seed oil imports, all of which may be halted if the conflict persists.
While Sub-Saharan economies are also likely to be impacted by tightening of global conditions and reduced foreign financial flows into the region, the analysis notes that the high fuel and food prices will translate into higher inflation across African countries, hurting poor and vulnerable citizens, especially those living in urban areas.
The report notes that recovery remains uneven, incomplete and is happening at varied rates of speed across the region. Of the region’s three largest economies—Angola, Nigeria, and South Africa—growth in South Africa is expected to decline by 2.8 percentage points in 2022, dragged by persistent structural constraints.
Angola and Nigeria are expected to continue their growth momentum in 2022, up by 2.7 and 0.2 percentage points respectively, in part due to elevated oil prices and good performance in non-oil sector.
Resource-rich countries, especially their extractive sectors, will see improved economic performance due to the war in Ukraine, while non-resource rich countries will experience a deceleration in economic activity.