Country Report Ghana March 2009

Summary

The new president, John Atta Mills, and his ruling National Democratic Congress will spend the next few months consolidating power and re-establishing themselves after being out of power since 2001.
The new government's economic policy is expected to remain focused on reducing inflation and boosting economic growth and investment.
Real GDP growth is forecast to ease to 5.2% 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 nascent oil sector and lower inflation.
After a steep fall in 2008, the cedi looks to be closer to its appropriate level against the US dollar. The stronger dollar and lower foreign-exchange earnings will cause the cedi to continue a gradual slide against the US currency in 2009-10.
The effects of expansionary government spending in 2008 are expected to cause inflation to remain high at an average of 14% in 2009 before tighter fiscal and monetary policy help to lower it to an average of 10.8% in 2010.
Forecast lower demand and import prices are expects to combine with healthy export growth to narrow the current account deficit to 13.4% of GDP in 2009 and 11.6% of GDP in 2010.

In mid-February, Daniel Charles Gyimah, the managing director of the largely state-owned National Investment Bank, was arrested and charged with wilfully causing financial loss to the state.
The president has made clear that fiscal austerity measures will be necessary to reduce the government's huge deficit.
As inflation continued accelerating in January, the Bank of Ghana (BoG) revised the prime rate from 17% to 18.5% in February 2009.
Year-on-year inflation for January 2009 was 19.86%up from 18.13% in December. This is the highest rate since February 2004.
Recent data show that the cedi depreciated sharply, both in nominal and real terms, in 2008. The cedi depreciated by 22.9% against the US dollar in January.
Ghana's gold exports performed well in 2008, reaching US$2.2bn compared to US$1.7bn for 2007 owing to high prices and increased production.
BoG trade data indicate that capital and intermediate goods were the main cause of the spiralling trade deficit in 2008.

Source: Country Report

This report covers the following industry codes:
SIC Code: 10
NAICS Code: 212