The World Bank’s optimism about prospects for Ghana’s economy proved a tonic for Accra-traded stocks: the country’s benchmark index sat atop the world as January drew to a close, raising hopes for investors, businesses and rank and file Ghanaians, already having a feel of the social protection programmes that government is putting in place at the grass roots.
According to Bloomberg, world renowned financial analysts, for example, Ghana benchmark index gained most in dollar terms, reflected in the Ghana Stock Exchange Composite Index gaining 19 percent since the year began in dollar terms, and ranking first most among benchmarks tracked by Bloomberg.
“We can’t discount the sentiment factor, the optimism in the market in terms of Ghana being one of the fastest-growing economies,” Karl Ocran, head of investments at Accra-based Frontline Capital Advisors, was reported to have said.
Investors are attracted by strong economic growth and stabilizing inflation. “Valuations on the market are still cheap,” he said.
Ghana’s economy will probably grow 8.3 percent this year, the fastest in the world, the World Bank said in a report earlier this month. The central bank foresees inflation in a band of 6 percent to 10 percent by the end of the year, down from 11.8 percent in December.
Ghana’s economy increased from 3.7% in 2016 to an estimated 7.9% in 2017, and is on record as the best annual real GDP growth for the first year of any new government since 1992.
At the end of 2016: Real GDP growth was down to 3.7% in 2016 from 9.1% in 2008, declining growth in agriculture and industry, rising Unemployment, High Fiscal Deficits, Rising Public Debts, High interest rates, Accumulating Arrears on government obligations – The arrears validated as outstanding at the end of 2016 was GH¢3.1 billion, Weakening of the Banking system, Cancellation of teacher and nursing training allowances, Return to cash and Carry under NHIS, freeze on the hiring of Extension Officers in agriculture, High and pervasive taxes, and Corruption.
At the same time the government committed in the 2017 budget to reduce the fiscal deficit from 9.3% to 6.3% of GDP, in spite of revenue generation challenges.
Economic growth has increased from 3.7% in 2016 to an estimated 7.9% in 2017. This is the best annual real GDP growth for the first year of any new government since 1992. Agriculture growth increased from 3.0% in 2016 to a projected 4.3% in 2017 and Industry from -0.5% in 2016 to 17.7% at the end of September 2017, underpinned by increased petroleum production.
Inflation also declined from 15.4% in 2016 to 11.8% in 2017, while the Bank of Ghana Monetary Policy Rate saw a year-on-year reduction from 25.5 percent by end-2016 to 20 percent by end-2017, indicating the largest single year reduction in the monetary policy rate since 2001and since the onset of the Bank of Ghana’s inflation targeting regime.
In addition, Ghana’s external payments position has strengthened. The trade account recorded a surplus of $646 million (1.4% of GDP) as at September 2017 compared to a deficit of $2.0 billion (4.7% of GDP) for the same period in 2016. Our gross international reserves increased from $6.2 billion in December 2016 (3.5 months of imports) to $7.4 billion as at 24th November 2017 (4.1 months of imports).
Ghana’s sovereign credit rating has improved with Fitch ratings changing Ghana’s B rating outlook from “Negative” to “Stable” while S&P changed Ghana’s outlook from Stable to Positive. The primary balance also posted a surplus for 2017 compared to the deficit recorded in 2017 and the debt to GDP ratio declined for the first time since 2007 from 73% of GDP in 2016 to some 70% in 2017.
The rate of accumulation of Ghana’s debt stock has also declined significantly, with the annual average rate of debt accumulation of 36% over the last four years declined to 13.58% in the first four months of 2017.
Crucially, Fiscal Discipline has been restored and fiscal consolidation has taken hold. Indeed, for the first time since 2006, the government of Ghana has been able to meet its fiscal deficit target notwithstanding some revenue shortfalls. The fiscal deficit target was to reduce the deficit from 9.3% of GDP in 2016 to 6.3% of GDP for 2017. The preliminary data for end December 2017 indicates that the fiscal deficit was some 5.6% of GDP in 2017.
Hope in Ghana’s economy on the part of development partners is attracting funding for various programmes being undertaken by the Nana Akufo Addo administration, in agriculture, infrastructure, health and education, among other sectors of the economy.
thestatesmanonline
