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Ghana Business Forecast Report Q2 2011
Business Monitor International, March 2011, Pages: 38
A Transformative Year - The coming year should see a big transformation for the Ghanaian economy. The onset of oil production should propel real GDP growth into the double digits, with rising cocoa production and strong private investment also making an important contribution to economic activity. Yet, we are mindful of certain weaknesses in the macroeconomic picture, primarily inflation and external debt levels.
Nevertheless, we retain our broad optimism towards Ghana, highlighting that it will be a major economic outperformer over the coming years on both a regional and global level. We are forecasting real GDP growth of 14.0% in 2011 and an annual average of 9.1% over 2012-2015. On the political front, we highlight concerns over rising inflation and the potential implications for stability. While we are relatively sanguine in this respect, we are congnisant of the risks stemming from pressurised consumer budgets. Indeed, a number of Ghanaians took the streets of Accra in protest of the elevated cost of living in late January.
Yet, we believe the threat of further significant unrest is relatively muted: there is a relatively low tendency for protests, the government is engaging heavily in pro-poor spending and there are visible infrastructural improvements in the pipeline that should encourage the populace to believe that livelihoods are improving. O n the economic front, recent developments bode well. Activity is picking up across a plethora of industries and consumer confidence has seen a notable rise of late. Investment trends are also encouraging, with services and manufacturing receiving strong interest from abroad. We further highlight the outlook for the fiscal accounts. Following the release of the 2011 budget by the Ministry of Finance and Economic Planning, we retain our expectation for Ghana’s budget deficit to narrow over the long term.
Finally, we focus on the key cocoa sector. We expect Ghanaian production to continue growing over the long term, although this expansion will be somewhat constrained by government price controls. With regard to the business environment, the picture is one of gradual improvement. The Ghanaian authorities are fast-tracking the construction of a deep sea oil port and revamping a major rail link this year in a bid to maximise the benefit derived from energy and mineral resources.
They also plan to modernise and expand Takoradi port to cater for the needs of the emerging oil & gas industry. Broadly speaking, Ghana continues to attract business due to its favourable political climate and the pro-business reforms of recent years, which include free trade zones and laws encouraging foreign investment.
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