Country Report Ghana May 2009

Outlook for 2009-10

• The new president, John Atta Mills, and his ruling National Democratic Congress (NDC) will spend the next few months consolidating power and re-establishing themselves after being out of power since 2001.
• The global recession and heightened risk aversion will compound the challenges facing Ghana's new policymakers as the economy slows amid much weaker commodity prices and tighter 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 dollar, 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 in 2008 are expected to cause inflation to remain high, at an average of 16% in 2009, before tighter fiscal and monetary policy help to lower it to an average of 11% in 2010.
• Falling imports and healthy export growth are expected to narrow the current-account deficit to 14.9% of GDP in 2009 and to 10.9% of GDP in 2010.

Monthly review

• The NDC now has a total of 115 seats out of the 230 seats in the Ghanaian parliament, following the delayed declaration of the Asutifi South constituency parliamentary election result.
• A number of high-profile New Patriotic Party (NPP) stalwarts have begun a public discussion into what caused their defeat in spite of their incumbency.
• Stories have emerged that the government is seeking to borrow up to US$1bn from the IMF to help to stabilise the Ghanaian economy.
• Mr Atta Mills has constituted a ten-member economic advisory council. The advisory council is intended to advise him on managing the impact of the current economic challenges.
• The finance minister, Kwabena Duffuor, has criticised the previous govern-ment over its management of the cedi and its redenomination in 2007. MrDuffuor was also critical of the former administration's inflation targeting.
• The Ghana Statistical Service has published fresh performance indicators of the economy, with a revised estimate that real GDP growth was 7.3% in 2008.
• There is increasing disquiet among Ghanaians in the wake of the official takeover and re-branding of Ghana Telecom by Vodafone.

This report covers the following industry codes:
SIC Code: 48
NAICS Code: 517