Ghana Business Forecast Report Q4 2008

Publication Date	August 2008
Publisher	Business Monitor
Product Type	Report
Pages	58
ISBN Number	1757-0778
Product Code	BMI02405

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Summary

Inflation And Depreciation: Testing Times

Ghana is a beacon of stability in the West African region, and is currently enjoying buoyant economic growth thanks to natural resource wealth and burgeoning financial inflows. Although headwinds have gathered for Ghana's economy over the past quarter, we remain broadly optimistic on the country's growth potential. The December 2008 presidential elections will be a key event, testing the country's relatively young democratic system and determining the path of policy. While notable challenges remain - not least building infrastructure, tackling poverty and bringing inflation under control - the Ghanaian economy should remain on its upward trajectory.

The December 2008 presidential and parliamentary elections will prove an important test of Ghana's democratic credentials. They remain a two-horse race between the ruling New Patriotic Party (NPP) and opposition National Democratic Congress (NDC). The NPP looks set to win votes thanks to its progress on socio-economic development while the NDC is emphasising job creation, fiscal restraint and tackling corruption. The risk to economic policy is relatively mild in our view and our core scenario is for stability at the polls.

We have revised downward our forecast for real GDP growth in 2008 to a still-strong 6.4% from a previous 6.7%. Key trends that have prompted us to make this adjustment are the acceleration of inflation, notable depreciation of the Ghanaian cedi, a widening fiscal deficit and deterioration of the current account. Amid a frothy equity market, we highlight key growth sectors and stocks that may interest investors over the coming months and years. In our recently-introduced ten-year forecasts, we assess the impetus that forthcoming domestic oil production will bring to the economy in 2010.

Ghana attracts business due to its favourable political climate and the pro-business reforms of recent years which include gradual liberalisation of the capital accounts. Ghana suffers less from corruption and graft than other countries in the region, although it is widely thought that government-related corruption is increasing. However, there are notable weaknesses in the business environment, with infrastructure reining in the potential for economic expansion; power and water shortages remain commonplace, although the situation is improving.

Content

Executive Summary
- Inflation and Depreciation: Testing times
Chapter 1: Political Outlook
- SWOT Analysis
- Bmi Political Risk Ratings
- Domestic Politics
- Elections 2008: Run-off Beckons
- The December 2008 Presidential and Parliamentary Elections Will Be A Closely-Fought Race between The Ruling New
- Patriotic Party and The Opposition National Democratic Congress.
- Table: Ghana Political Overview
Chapter 2: Economic Outlook
- SWOT Analysis
- Bmi Economic Risk Ratings
- Economic Activity
- Growth of 6.4% in 2008 despite Challenges
- Although Ghanas Economy Is Arguably Overheating at Present, We Believe The Increase of Local Interest Rates Will
- Begin to Dampen Private Consumption and Private Investment Alike over H208.
- Table: Economic Activity
- Fiscal Policy
- Fiscal Deficit to Peak in 2008
- The Fiscal Deficit in Ghana Will Swell Notably in 2008, Coming in at A Forecast Ghs1.6bn (9.0% of Gdp).
- Table: Fiscal Policy
- Exchange Rate Policy
- Short-Term Outlook
- The Beleaguered Ghanaian Cedi Should Receive Some Support over August-September from Privatisation Inflows
- and The Sale of The Annual Cocoa Crop, Bringing The Currency Back to The Ghs1.10/US$ Region.
- Table: Exchange Rate Policy
- Equity Outlook
- Potential Equity Bubble, but Opportunities Remain
- The Combination of Limited Liquidity and A Strong Appetite for Ghanaian Equities Has LED to The Possible Formation
- of A Bubble Which Could Burst. If This Plays out, and Valuations Come down, Banking and Consumer-Driven Sectors
- Will Likely Prove Attractive.
Chapter 3: 10-Year Forecast
- The Ghanaian Economy to 2017
- Oil to Boost Growth over 2008-2017
- We Are Sanguine on Ghanas Growth Prospects for 2008-2017, Forecasting Annual Real Gdp Growth of An Average
- 5.1% over The Coming Ten Years.
- Table: Ghana Long-Term Macroeconomic Forecasts
Chapter 4: Special Report
- Mega-Urban Regions
- Table: The Worlds 30 Largest Urban Agglomerations
- Table: The Worlds Richest Cities in 2020 by Gdp
- Table: The Worlds Fastest Growing Urban Areas by Population
Chapter 5: Business Environment
- SWOT Analysis
- Bmi Business Environment Risk Ratings
- Business Environment Outlook
- Institutions
- Table: Bmi Business and Operational Risk Ratings
- Table: Bmi Legal Framework Ratings
- Table: Middle East &Africa Fdi
- Infrastructure
- Table: Bmi Trade Ratings
- Table: Top Export Destinations
- Market Orientation
- Operational Risk
Chapter 6: Bmi Global Assumptions
- Global Outlook
- Table: Global Assumptions
- United States
- Eurozone
- Japan
- China
- Commodities