Researchers at Standard Bank, parent company of Stanbic Bank Ghana, have said Ghana’s economy is expected to exceed initial growth forecast growing by 7.3% this year. In its May 2021 edition of the African Markets Revealed (AMR) report, the Standard Bank mentions that despite the devastating effects of the pandemic the Ghanaian economy was able to record some marginal growth in 2020. This, the report said, provides impetus for a swift recovery in 2021.
“Although the Ghanaian economy had slid into recession in the third quarter of 2020, managing growth of 3.3% year-on-year in the fourth quarter ensured marginal growth of 0.4% year-on-year for 2020. However, the annual growth numbers for the first three quarters of 2020 have been revised. Provisional data had shown 4.9% year-on-year growth in the first quarter of 2020 but that was revised to 6.8% year-on-year,” the report said.
The report added that “The revised numbers indicate a deeper contraction in both the second and third quarters of the year. Therefore, due to unwinding base effects, GDP growth in 2021 may well overshoot our initial forecast of 4.8% year-on-year. We now expect this economy to grow by 7.3% year-on-year in 2021, then moderately to 5.9% year-on-year in 2022.”
According to the report, Ghana’s swift economic recovery was as a result of strong performances in the agricultural and service sectors with the real estate and ICT sub-sectors driving the recovery in the service sectors. “As expected, the agricultural sector led this economy in 2020. This sector grew by 8.2% year-on-year in the last quarter of 2020, while the real estate and ICT sub-sectors drove the recovery in the services sector, which expanded by 4.6% year-on-year in the same quarter. Our base case foresees growth in 2021 and partly assumes no stringent lockdown measures, which should allow for a more meaningful, and broader, economic recovery,” the report said.
The report further added that the success in the global vaccination drive could create external demand for the country’s top exports. “Successes in the global vaccination drive may set the stage for an improvement in external demand for Ghana’s top exports of gold, oil and cocoa in the second half of this year. We still view Ghana’s economic growth prospects as positive over the medium to long term. In fact, it may well be a preferred investment destination. Sure, relatively higher real yields have attracted a significant amount of foreign portfolio investment into Ghana this year,” the report noted.
The AMR also mentioned that the government’s plans to tap into the agricultural value chain by creating more industries to process cocoa could potentially drive more direct investment while the government strives to improve the ease of doing business in Ghana. Moreover, the report said even though there has been a decline in investment in the oil and gas industry as a result of the pandemic and lower oil prices, there is still the possibility of growth of 4.3 year-on-year this year.
The African Markets Revealed Report 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.