Roundup: Experts divided on Ghana's economic prospect in 2018

by Justice Lee Adoboe

ACCRA, April 23 (Xinhua) -- Experts are divided on the prospects of Ghana's economic growth in 2018, as conflicting projections keep coming out from various quarters.

In its 2018 fiscal policy, the government had projected to achieve a 6.8 percentage growth in Gross Domestic Product (GDP).

The 16-month-old government led by Nana Akufo-Addo has been achieving some remarkable successes in the fight to maintain fiscal discipline.

Provisional data on government operations indicated an overall budget deficit of 6.0 percent of GDP in 2017 against the target of 6.3 percent. Also, total public debt declined from 73.1 percent of GDP in December 2016 to 69.8 percent of GDP while inflation rate declined to 10.4 percent in March, relative to the 12.6 percent last December.

Some analysts were therefore hopeful that the West African gold, cocoa and oil exporter was going to achieve the fastest growing economy in the world once again in 2018.

A New York Times report said in March: "Projections currently suggest that Ghana's economy will grow from between 8.3 and 8.9 percent in 2018. We took a look at the macroeconomic situation of the Ghanaian economy and suggested that the country was set to get back on track following a tough year in 2016; the reality is that this estimate may have been too conservative."

Situations, however, overtook projections when the Ghana Statistical Service (GSS) released its preliminary projections to indicate that the Ghanaian economy had grown 8.5 percent last year, relative to the 3.7 percent growth recorded in 2016.

Albert Zeufack, World Bank's Chief Economist for the African Region, lauded Ghana for the economic growth figure of 8.5 percent achieved last year as well as the significant reduction in fiscal deficit to about 6 percent from above 9.0 percent recorded a year earlier.

However, since the growth was mainly due to increased production in oil and improving prices of commodities on the world stage, Zeufack urged Ghana to accelerate the process of value addition to its primary export products to be able to sustain the growth momentum.

From the foregoing, some analysts are of the view that economic growth may have peaked in 2017 and could be seeing a decline from this year unless there are new oil fields discoveries before the year ends.

"We expect 2018 growth to be lower than what was achieved in 2017. Growth is going to normalize in subsequent years. What we experienced in oil production in 2017 was higher than what we projected for," Yaw Gyan-Kwakye, an economist at the World Bank Ghana country office, projected in an interview.

The government had projected an 8.0 percent growth for last year while the World Bank projection was below 8 percent for the year gone by.

"In the next few years, the projection for oil is going to go down unless more fields are added. But if you look at the current fields being exploited now, oil production is going to go down by 2020 to 2025. So in a sense, much more has to be done to the non-oil sector to sustain the growth that we are in.

"If you look at the growth for 2017, the non-oil sector went down a little bit and it came from the services sector. Most of the activities under the services sector did not perform very well. So these are the areas that need to be looked at," the economist stated.

World renowned Renaissance Capital, in their analysis of the Ghanaian economy, was emphatic that the economy would grow at 5.7 percent this year.

The Russian-based investment group attributed the slower growth projected to a deceleration in the oil and cocoa sectors, lower government spending and tight credit conditions.

It added that growth in services, construction and manufacturing sectors would remain modest as a result of tight fiscal policy and credit conditions and the continued fixing of balance sheets by commercial banks.

The investment group observed that Tullow, the operator of the Jubilee and the Tweneba-Enyenra-Ntomme (TEN) fields, expects Jubilee's production to fall by 15 percent to 75,800 barrels of oil per day (bopd) on the back of ongoing 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 64,000 bopd, and the first full year of production at the Sankofa field," it said. Enditem