Ghana’s economy to expand by 6.2% this year – Standard Bank
Standard Bank, the parent company of Stanbic Bank Ghana, has projected Ghana’s economy to expand by 6.2% this year and grow by 6.8% next year.
The projection is line with the efforts made by the government in significantly progressing vaccinations and the easing of Covid-19 restrictions which will stimulate demand and supply within the economy.
“On a quarter-on-quarter basis, the mining and quarrying sub-sector grew by 16.9%, from an average contraction of 10.7% in the first 6 months to Jun 21, implying that growth momentum may be recovering.
“Gold production from underground ore sources should commence from January 22, 2022 at the Obuasi mine. New contracts to conduct mining activities at the Bibiani mine have already been awarded, which should boost investment in the sector over the next few years,” said Standard Bank.
However, cocoa production and exports are expected to decline this year due to global supply challenges.
Ongoing global supply chain challenges and fertilizer shortages could retard growth in the cocoa and industrial sub sectors in 2022.
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As the economy continues to recover from the pandemic, non oil imports may increase further and this will widen the country’s current account deficit.
The report said Ghana’s current account deficit is likely to widen to 5.0% of Gross Domestic Product (GDP) in 2022, from an expected 3.9% for 2021.
“Whereas we expect a recovery in gold production and exports over the coming year, we simultaneously also see a notable rise in the imports of goods. As the economy continues to recover from the pandemic, non-oil imports may increase further. Also, given the government’s expansionary fiscal policy stance, capital goods imports will likely remain elevated over the next two year. Higher international oil prices too could continue to widen the trade balance.”
Furthermore, “cocoa production and exports could still be dragged lower due to fertiliser shortages. As of Q2 2021, cocoa and gold exports combined accounted for around 55.3% of total merchandise exports.”
Standard Bank furthers that the country’s ability to tap the Euro bond market may diminish while the foreign exchange reserves could remain under pressure unless the government acquires alternative sources of external financing.
“As global risk may worsen further in the first-half of 2022, and Ghana’s ability to tap the Eurobond market may further wane. Foreign exchange reserves could remain under pressure in 2022 — unless the government acquires alternative sources of external bilateral and multilateral funding.”
