Ghana set to see steady GDP growth into 2020

Economic Researchers at Standard Bank, parent company of Stanbic Bank Ghana are predicting a steady growth in Ghana’s GDP going into 2020.

According to the May 2019 edition of the African Monthly Report (AMR) published by Standard Bank Group, Ghana’s acceleration in GDP growth from to 7.5 to 7.6% year-on-year and 7.8% year-on-year in 2019 and 2020 respectively from 6.3% year-on-year in 2018 still appears highly probable.

The report notes that the redevelopment of the Obuasi gold mine amongst others is expected to boost growth beyond current forecasts. Furthermore, the export oriented sectors are expected to play a major in the sustenance and achievement of the projected GDP growth as oil production is likely to be hovering around 200k bpd.

The economic and research experts at Standard Bank further indicated that, in the face of the disruptions in oil production form the Jubilee Oil Fields which resulted in only one lifting in Q1 2019 compared to 3 in Q1 2018 other sectors remained relatively stable.

Commenting on the report, Head of Africa Research at Standard Bank, Phumelele Mbiyo said, the growth recorded in the mining, quarrying and agricultural sectors are likely to be maintained this year.

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“Despite the disruptions to oil production, mining and quarrying recorded growth of 23.3% y/y in 2018, marginally lower than the 30.8% y/y growth rate recorded in 2017. Needless to say, the oil and gas sector decelerated to 3.6% y/y growth from 80.3% y/y growth in 2017. Agricultural production appears to be growing solidly, with crop production up 5.8% y/y and livestock production up 5.4% y/y. This momentum appears likely to be sustained in 2019”, Mr. Mbiyo said.

The report also noted that foreign exchange reserves got a significant boost when the government issued Eurobonds in March. Gross forex reserves rose to USD9.2bn from USD6.3bn in February while net FX reserves rose to USD6.3bn from USD3.2bn over the same period. The AMR concluded that the headline inflation in Ghana is expected to end 2019 at 9.5% year-oyear with the slow pace of the cedi depreciation expected to be instrumental in deterring inflation pressures.

The May AMR further reported that Ghana’s balance of payments has remained strong since March 2019 due to strong financial inflows. According to the report, “Foreign exchange reserves got a significant boost when the Government issued Eurobonds in March. Gross financial reserves rose to USD9.2bn from USD6.3bn in February while net financial reserves rose to USD6.3bn from USD3.2bn over the same period.”

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“This surge in financial reserves will likely be transitory, with reserves likely dropping over the course of the year as the government implements its projects. We estimate that by year-end net financial reserves will amount to USD4.8bn, covering 4.1-m of goods imports, from USD3.9bn in December 18”, the report continued.

The success of the Eurobond issuance is a testament to the country’s capacity to attract external capital. It is also quite likely that FDI inflows will be robust in the coming 2-y.

The African Markets Reveal is a monthly report issued by the Standard Bank Group, parent company of Stanbic Bank Ghana and focuses on the economic and financial outlook of African countries. The report also reviews current economic situations and makes short to medium-term predictions about the economies of African countries.

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