Ghanaian economy likely to reaccelerate in 2020 despite election year influences – Standard Bank

Economic analysts at Standard Bank, parent company of Stanbic Bank Ghana, have indicated that Ghana’s economy is likely see a boost despite the risk factors usually associated with fiscal behavior in election years.

This was contained in the January 2020 edition of the African Monthly Report (AMR).

According to the report, the envisaged acceleration will be provided by the export-oriented sectors of the economy, which is also likely to be the main propeller of growth in the next two to three years.

“We maintain our constructive view regarding the economic growth outlook for Ghana in the medium term. We continue to highlight the probable boost that the export-oriented sectors of the economy will likely provide to overall economic growth over the course of the next 2-3 years”, the report said.

The report further stated “We forecast GDP growth of 6.9% y/y in 2020, accelerating to 7.4% y/y in 2021, from what we estimate was 6.1% y/y growth in 2019”. While things look quite good for the Ghanaian economy in 2020, one area the report foresees a deceleration in is the mining and quarrying sector.

The AMR indicates that the downward trend in growth experienced in the sector in 2019 is expected continue in 2020 with the mining sector being the main culprit although the opening of the Obuasi gold mine is likely to provide some support for the sector.

The report indicated that:

“While up to now the deceleration in growth of the mining and quarrying sector has not been attributable to the oil sector, there is a risk that this sector might decelerate this year. Given that the oil sector grew strongly in the first 3 quarters of 2019, mining was likely the main culprit in the deceleration of the mining and quarrying sector.”

The report continued that “The Obuasi gold mine has resumed production should provide some support to the mining sector in 2020.

Commenting on the performance of the local currency this year, the AMR predicts that depreciation of the Ghana Cedi is inevitable.

The report predicts that the local currency will end at GHS5.85 to a dollar in the first quarter and at GHS6.00 to the dollar at the end of the second quarter.

According to the report, “Depreciation seems inevitable this year; the only question is the magnitude. We expect USD/GHS to end Q1:20 at 5.85 and Q2:20 at 6.00. In recent months, the BoG has been steadfast in intervening to restrain the depreciation trend. Just as last year, it is likely that the BOG will rely on government issuance of Eurobonds to provide it with the ammunition to intervene in the forex market”.

The African Markets Reveal 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.