Ghana leads growth economies

Company News from Tuesday, April 16, 2019

Source: Graphic.com.gh

2019-04-16

Ghana is expected to be one of the world's two fastest-growing economies this year, ahead of its competitors in sub-Saharan Africa, with the exception of South Sudan.

Forecasts, contained in the latest Global Economic Outlook released by the International Monetary Fund (IMF) this month, reduce growth projections for Sub-Saharan African countries this year to 3.5% against 3.8% last year.

The economies of Ghana and South Sudan are expected to grow by 8.8 percent, the fastest pace ever expected for this year.

South Sudan is emerging from years of conflict, following a peace deal signed last year that allowed it to begin pumping crude oil.

The World Bank, however, provides a slightly lower economic growth forecast of 7.6% in Ghana.

The government of Ghana itself is conservative in its growth forecasts; it gives a slightly lower projection of 7.2% in the 2019 budget.

Caution

The IMF's regional growth forecasts were more optimistic than those of the World Bank, which indicates that the economic recovery in sub-Saharan Africa will take longer than expected and that, consequently, its forecasts for 2019 have gone from 3.3% to 2.8%.

Falling commodity prices in 2015 put an end to a decade of rapid growth for the economies of the region.

However, IMF Africa Department chief Abebe Aemro Selbadie warned of the growing vulnerability of the public debt in some countries and posing economic challenges.

"The reason for the increase in the level of debt tends to be very specific to each country; for some, this is due to the need to meet the major infrastructure needs, "he said.

Vulnerabilities of debt

Mr Selbadie said other countries were experiencing debt vulnerabilities because of the commodity price shock that hit them between 2014 and 2016, while others followed pro-cyclical policies that had led to a marked increase in the level of debt.

"In the future, we see two major policy implications: first, in fast-growing economies such as Ghana, Benin, Ethiopia and Senegal, there is a need to move beyond the growth of the public sector to the private sector. sector, "he said.

Lower budgets

According to the IMF, declining budgets and a less favorable external environment have made it difficult to find ways to meet human and physical capital investment needs and create enough jobs to absorb 20 million newcomers. in the labor market each year.

"To solve this problem, it is essential to have sufficient resources, to improve resilience to shocks and to create an environment conducive to sustained, high and inclusive growth," Selbadie said.

Reduced growth

South Africa, the most advanced economy in the region, saw its growth reduced to 1.2% due to the uncertainty of economic policy because of the upcoming elections next month.

The new forecast also reflects downward revisions for Angola and Nigeria, with a easing of oil prices, the IMF said.

Nigeria should stand out as oil prices recover. Its growth should increase from 0.8% in 2017 to 2.1% in 2018 and 2.3% in 2019, thanks to the improved oil price outlook.

Nigeria and South Africa are the continent's two largest economies, and positive economic growth in both countries would see the recovery continue in sub-Saharan Africa, according to the report.

"The recovery in sub-Saharan Africa is expected to continue, supported by rising commodity prices. For the region, growth should rise from 2.8% in 2017 to 3.4% this year, reaching 3.8% in 2019.

"The revised forecasts reflect better prospects for the Nigerian economy. Its growth should increase from 0.8% in 2017 to 2.1% in 2018, "said the IMF.

At the same time, global growth is expected to reach 3.9% in 2018 and 2019, in line with forecasts for April 2018.

Expansion was becoming less steady and risks to the outlook were increasing, according to the report.