Economy to grow by 5.7% in 2018 – Renaissance Capital


Due to a slowdown in the oil and cocoa sectors, lower government spending and tight credit conditions, Ghana’s economy is expected to grow by 5.7percent, Renaissance Capital, an investment bank, has said.

According to the Russian-based investment bank with offices around the globe, growth from services, construction and manufacturing will remain modest owing to tight fiscal policy and credit conditions, as banks continue to repair their balance sheets.

“Tullow expects Jubilee’s production to fall by 15 percent in 2018 to 75.8k boe/d on the back of a planned shutdown related to maintenance work. This is likely to be mitigated by a 14 percent projected increase in production at the TEN field to 64k boe/d, and the first full year of production at the Sankofa field.

Cocoa output is projected to fall by 26 percent in the 2017/2018 season, to 700kt, according to a statement made to the media in March by Cocobod marketing board’s head. This implies slower agriculture growth in 2018.

In May, the authorities plan to unveil rebased GDP numbers – “which are likely to show a bigger industrial sector (vs 25 percent now), among other changes”, Renaissance’s 2018 outlook pointed out.

Even though government has forecast an overall GDP growth of 6.8 percent, most analysts have noted that with a prolonged tightening of the fiscal space, this target could be difficult to attain.

In 2017, the economy expanded by 8.5 percent, becoming the fastest rate in five years – mainly on the back of increased oil and gas production; meanwhile, in 2016 the recorded economic growth was 3.7 percent.

Growth in the fourth quarter of 2017, according to the Ghana Statistical Service (GSS), reached 8.1 percent compared to 9.7 percent in the third quarter. That third quarter figure was revised upward from 9.3 percent.

The economy recorded its fastest-ever growth rate of 14 percent in 2011, when it started commercial oil and gas production. The economy also grew by 9.3 percent the following year. Oil production grew by 80.4 percent in 2017.

Aside from Jubilee, Ghana also produces oil from the TEN field and reserves operated by Italy’s Eni which came on stream last year. The London-listed Tullow Oil is lead operator for both Jubilee and TEN.

With the country in its final year of a US$918million credit deal with the International Monetary Fund to narrow deficit and debt and spur growth, some analysts worry that it might regress into annual fiscal slippages and slow economic growth.


On inflation, Renaissance Capital expects it to average 10.4 percent in 2018, after it slowed to 10.4 percent year-on-year in March from 12.8 percent.

But President Nana Addo Dankwa Akufo-Addo, speaking at a conference in London this week, said his government aims to bring inflation down to single-digits in 2018, at around 8.9 percent. “This would make us one of the fastest-growing economies in the world,” he said.

President Akufo-Addo said his government is keen on establishing a business-friendly economy that attracts foreign direct investments on mutually satisfactory terms to exploit Ghana’s great potential.

He stated firmly that the private sector’s role in the development of Ghana’s economy is crucial: “It is the very essence of our economic philosophy and has been so for 70-odd years.” He related how his administration, over the past 15 months, had instituted the required actions to ease the cost of doing business and improve the business environment in Ghana.

These measures, he said, have resulted in macro-economic stability, reduction in inflation and the abolition of nuisance taxes – aimed at shifting the economy’s focus from taxation to production, as well as reining-in fiscal deficit from 9.5 percent to 5.6 percent at the end of the 2017 fiscal year. Ghana’s fiscal deficit has been projected to go down to 4.5 percent in 2018.

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