Country Report Ghana July 2009

Outlook for 2009-10

• The president, John Atta Mills, and his ruling National Democratic Congress (NDC) will have to balance honouring their electoral promises with stabilising the economy in a very challenging global and local environment.
• The global recession and heightened risk aversion represent a stern test for Ghana's new policymakers, as the economy slows amid much weaker commodity prices and tighter global financing conditions.
• Real GDP growth is forecast to ease to 4.7% in 2009 on the back of weaker credit growth and reduced government spending, before recovering modestly to 5.4% in 2010, supported by investments in the oil sector.
• The stronger US dollar, a large current-account deficit and low foreign-exchange reserves will cause the cedi to continue to depreciate in 2009-10.
• The effects of expansionary government spending and a weak currency are expected to cause inflation to increase to 19.5% in 2009, before tighter fiscal and monetary policies help to lower it to an average of 13.2% in 2010.
• An upward revision to oil prices has prompted us to increase our forecast for imports, leading to a wider current-account deficit than previously envisaged.
• Falling demand for capital imports and healthy export growth are still expected to narrow the current-account deficit to 16.1% of GDP in 2009 (previously 14.9% of GDP) and 12.1% of GDP in 2010 (previously 11.5%).

Monthly review

• The minister of youth and sports, Alhaji Mohammed Muntaka Mubarak, has been forced to resign after the revelation of evidence of impropriety. There have been calls for his prosecution.
• A number of opposition members have also come under investigation for corruption. Although the claims are relatively minor in nature, the NDC looks determined to settle some scores with its opponents.
• The government has agreed a large financing deal with the World Bank. Despite opposition criticism for taking on the loan, the government has little choice if it wants to be able to bring a degree of stability back to the economy.
• There are a number of conditions placed on the credit provided by the World Bank, some of which are likely to be unpopular, including closer control of public-sector wages.
• Although the interest rates of the Bank of Ghana (the central bank) have remained fairly stable in recent months, lending rates at commercial banks have continued to trend upwards amid growing evidence of a credit squeeze.

Source: Country Report

This report covers the following industry codes:
SIC Code: 37;49;60;53;59;48;2834;80;1;70
NAICS Code: 336;22;52;44;517;3254;62;11;72