IMF revises Ghana’s growth rate downwards

The International Monetary Fund (IMF) has revised Ghana’s economic growth for this year downwards by 1.3 percentage points to 7.5 per cent, from an earlier projection in April of 8.8percent.

This was contained in the IMF’s World Economic Outlook Report released yesterday at the ongoing IMF/World Bank Annual Meetings in Washington DC.

The Britton Woods institution was then basing its forecast on expected pick up in commodity prices, oil as well as some policy response measures that the government is expected to implement this year.
Despite the downward review, the new projection would still be the highest expected growth rate for Ghana by IMF since 2017, when the Fund then projected an 8.1 per cent GDP growth.

Sources close to the IMF say the revision was due to the expected reduction in crude oil production as well as oil prices declining on the international market. JoyBusiness understands that the move was also influenced by the reduction in cocoa production by the country than was earlier forecast by COCOBOD.

Earlier this year, Bloomberg News reported that Ghana would not be able to achieve its cocoa production target due to issues with swollen shoot diseases.
COCOBOD initially projected an annual harvest of 900, 000 metric tons but had to cut it to 800,000 metric tons. However, JoyBusiness is leaning that it ended the 2018/2019 crop season slightly lower than this target.

Government’s own projection
Based on the revised estimates captured in the 2019 supplementary budget Finance Minister Ken Ofori-Atta, the government is projecting an end of the year growth rate of 7.1 per cent.
This should mean that the IMF itself a little bit buoyant about Ghana’s growth prospects than what the government of Ghana is putting out.

However, some analysts have told JoyBusiness that it might be prudent to be moderate with these projections because of its impact on a country’s credibility as manager of an economy.
According to the half-year GDP estimates released by the Ghana Statistical Service growth ending June 2019, growth stood at 5.7 per cent, compared to the 5.4 per cent recorded for June 2018.

From the data, it was clear that month-on-month growth has slowed slightly, due to developments in the oil sector.
IMF and Ghana’s inflation outlook for this year

The IMF in the World Economic Report is also projecting an end of year inflation outlook of 9.3 per cent for 2019.
It is not clear for now whether they had factored the rebased Consumer Price Index that the Ghana Statistical Service released this earlier this year into this projection.

This reduced the inflation rate from the over 9 per cent range to 7.8 per cent for the month of August 2019This is a little below Bank of Ghana’s medium-term inflation outlook of 8 +/- 2.

Governor of the Bank of Ghana Dr Ernest Addison at the recent MPC Meeting noted that the bank may soon have look at review the inflation target when the current term expires, possibly looking at a lower band.

Impact of projection on Ghana’s economy
The revision may not come with any serious negative impact on the country’s economy, according to analysts.