Growth picked up but only slightly from 2015 levels and has remained below recent historical levels. Inflation continued on its downward trend but remained high for most of the year due to fuel price and utility tariff adjustments. As a result, monetary policy remained tight, keeping interest rates high and supporting stability in the Cedi. Fiscal consolidation efforts continued in the first half of 2016, although significant slippages occurred ahead of the election and amidst lower revenues caused by oil production challenges.
Going forward, we expect monetary and fiscal policy to remain tight under the ongoing IMF bailout programme. Inflation is likely to drift lower, albeit at a slow pace, with interest rates following suit. However, the cedi may come under pressure from a rising dollar and weak commodity prices for the nation’s main exports. Download full document
Ghana’s economic growth slowed further in 2015 on the back of a tight fiscal regime and persistent shortfalls in energy supply. The power crisis lasted throughout the year and significantly affected business and productivity across all economic sectors, but was particularly harsh for manufacturing and mining firms.
The government made commendable efforts at controlling its fiscal expenditure and remained within budget for the entire period under consideration. The tight fiscal conditions were matched by monetary policy tightening by the Central Bank, which raised the policy rate three times during the year in pursuit of its mandate of ensuring price stability. The Bank of Ghana also merged the policy rate with the repo rate and introduced measures to ensure a steady supply of forex within the banking system.
These actions, together with the inflows from the US$1.8bn COCOBOD syndicated loan and a US$1bn Eurobond, helped ensure stability in the value of the Ghana Cedi over the second half. However, inflationary pressures remained throughout the year due to utility tariff and fuel price adjustments that resulted from the implementation of fuel pricing deregulation. The banking sector recorded a sharp slowdown in growth due to a tightening in credit conditions and a deterioration of asset quality. Several players in the sector reported a decline in profitability for the 2015 financial year.
We expect Ghana’s macroeconomic variables to improve further in 2016. Inflation is likely to recede slowly towards the Central Bank’s target due to exchange rate stability, but is likely to end higher than the target. Despite election year pressures, we expect the Government to continue its tight fiscal stance in line with the IMF’s bailout conditions. We forecast growth to improve over the year. However, risks remain from the high cost of external borrowing, low global prices for Ghana’s export commodities and a relapse of the energy crisis. Read more...
Ghana’s economy in 2014 saw a slight improvement over 2013, although growth appears to have slowed down significantly. The Ghana Statistical Service recorded 5.1% growth in GDP in the third quarter. The fiscal and current deficit have both reduced slightly, and although targets are likely to be missed, they remain on a downward trajectory.
The energy crisis deepened over the year and had a significant effect on businesses and households. Rapid depreciation in the local currency resulting from speculation over the first eight months led to high inflation and increasing costs, especially in the industrial sector. However, the reduction in Ghana’s import bill was the result of the adverse movement, which led consumers to shift away from expensive imported products. Inflation was also spurred on by Government’s removal of subsidies on utilities and fuel in its attempts to cut down the fiscal deficit, and ended at 17% in December, from 13.8% recorded at the beginning of the year.
The Central Bank raised the policy rate three times during the year as part of efforts to reduce inflationary pressures and introduced foreign currency market regulations to control excessive speculation on the Cedi. Receipts of Grants and FDI fell again in 2014, resulting from Ghana’s status as a low middle-income country. The banking sector has continued to grow, although the expansion has largely been in urban areas.
Going forward, we expect macroeconomic indicators to continue to improve as the Government consolidates its fiscal position. Inflation is likely to fall as the Cedi enjoys relative stability against the major trading currencies. However, the risks to Gold and Oil prices may dent any attempts at a quick recovery. Click here to download full report
Following two years of a patchy recovery from the global financial crisis, world economy pivoted on the edge of another major recession. Majority of forces in play, are mostly familiar. Fiscal indiscipline and irresponsible financial act continue to drag growth and employment down, in advanced countries. In view of this, central banks, around the globe, stimulated aggregate demand, via maintenance of low monetary policy rate. In Europe, financial authorities have gone to the extent of direct participation in bond market, in order to ensure the survival of the European Union. Click here to download full report...
2011 evidenced a traumatic year increasing the likelihood of a double dip global recession. In spite of green shots in financial markets in the early 2011, it was beset with several challenges which saw most economies struggle with debt, unemployment and macroeconomic imbalances among other things. The US economy averaged a growth rate of 2.8% as it drowned in a weaker dollar, unemployment and generally low consumer confidence whilst Europe struggled with overleveraged nations. Click here to download full report...
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