Accra, Ghana, November 27, 2018//-The strengthening of the US dollar in the international markets has exerted pressure on currencies in emerging markets and frontier economies, including Ghana.
Global growth momentum moderated in the second half of the year, with some divergence between the U.S. and other advanced economies.
In the medium-term, steady growth is expected in most advanced economies as output gaps narrow alongside normalization of monetary policies.
For emerging market and frontier economies including Ghana, growth is projected to moderate on the back of heightened risks emanating from tightening global financing conditions, trade tensions and country-specific vulnerabilities.
In the year to November 22nd, the cedi cumulatively depreciated by 7.8 percent, compared with 4.6 percent depreciation in the same period last year, according to Governor of Bank of Ghana (BoG), Dr Ernest Addison.
“The Ghana cedi has also depreciated by 3.2 percent and 3.1 percent against the pound and the euro respectively over the same period, compared with depreciation of 11.1 percent and 14.4 percent respectively in the same period of 2017”, he added.
“In real terms, the cedi remained broadly in line with the underlying fundamentals. The real effective exchange rate, in trade-weighted terms, remained within the band of ±2 percent standard deviation”.
Reviewing the health of the Ghanaian economy for the first 11 months, Dr Addison observed that; “growth has remained modest but the negative output gap is expected to close at a fast pace over the medium-term”.
This will be supported by further increases in crude oil production. In particular, with the resolution of the Ghana/Cote d’Ivoire maritime dispute and the commencement of oil production by new oil companies is expected to provide an added boost to the economy, he explained.
“As a result, GDP is projected to record an average growth of 7.0 percent over the medium-term. Similarly, non-oil GDP growth is expected to average 6.6 percent”, he stated.
In addition, the 2019 Budget Statement seeks to provide some fiscal impulse to boost economic expansion, especially in the non-oil sector, which is positive for the growth outlook.
This is on top of the expected increase in activity in the real sector of the economy after the bank recapitalization exercise, according to the latest Monetary Policy Committee (MPC) report.
While execution of the 2018 budget has been affected by lower-than-expected revenue, all indications are that the fiscal consolidation is broadly on track, the reported.
The 2019 budget focuses on improving efficiency in revenue administration to underscore the continuation of the fiscal consolidation process over the medium-term. This would require extra vigilance and disciplined economic management to protect the gains made so far.
African Eye Report
