Gov’t revise downwards 2022 GDP growth from 5.8% to 3.7%
Government has revised downwards its GDP growth rate for 2022.
Making the disclosure during the presentation of the 2022 Mid-Year Budget Review on Monday, July 25, 2022, Mr Ofori-Atta averred GDP growth rates for 2022 has been revised downwards by 2.1% to 3.7%.
This follow’s Fitch Solutions’ downward revision of the country’s GDP growth to 2.6% from the earlier forecast of 4.8% for 2022 .
The revised GDP growth rate by Fitch Solutions is far lower than the projections by the International Monetary Fund (5.2%) and the World Bank (5.0%).
According to the research agency, its forecast is attributable to the country’s rising inflation rate, depreciation of the cedi, the Russian-Ukraine war, among other factors that it asserts will erode the purchasing of consumers and affect the profit margins of businesses in the country.
“Overall, we forecast the Ghanaian economy to post real growth of 2.6% in 2022 after which will accelerate to 4.9% in 2023. Whereas the slow growth rate, especially for 2022, is in a decade, we believe that the economy will face pretty significant challenges in the short term.”
“So the first challenge and one of the most significant ones is rapidly rising inflation which is shown on the right right-hand of the slide. The consumer price growth reached 26.6% in May [2022], which is the highest inflation rate in over 18 years. Really, it is biting into the purchasing power of the households and eroding corporate profit margins”, explained Country Risk Analyst at Fitch Solutions, Mike Kruninger.
Government earlier this year projected a GDP growth rate of 5.8% for this year.
Speaking on the floor of Parliament, the Finance Minister noted other macroeconomic targets for the year have been revised.
According to him, the revised macroeconomic targets are as follows:
- Overall GDP Growth rate of 3.7 percent down from 5.8 percent;
- Non-Oil GDP Growth rate of to 4.3 percent down from 5.9 percent
- End period inflation of 28.5 percent up from 8 percent;
- The overall fiscal deficit of 6.6% of GDP down from 7.4%
- Primary surplus of 0.4% of GDP up from a surplus of 0.1% of GDP; and
- The Gross International Reserves of not less than 3 months import cover.
Touching on government’s fiscal performance for 2021, the Minister noted overall real GDP for 2021 grew strongly by 5.4 percent compared to 0.5 percent recorded in 2020 and the revised 2021 annual target of 5.1 percent.
Non-oil GDP growth also increased to 6.9 percent compared to a growth of 1.0 percent recorded in 2020, and the revised 2021 target of 7.0 percent.
Overall budget deficit was GH¢28,095 million (5.6% of GDP), against a deficit target of GH¢19,730 million (3.9% of GDP).
Primary balance for the period was a deficit of GH¢7,618 million (1.5% of GDP), against a deficit target of GH¢672 million (0.1% of GDP).
Public-debt-to-GDP ratio, he further noted, stood at 76.6% at the end of 2021.
