Country Report Ghana November 2009

Outlook for 2010-11

• The president, John Atta Mills, and his ruling National Democratic Congress (NDC) will have to balance honouring their electoral promises against stabilising the economy in a very challenging global and local environment.
• Real GDP growth is forecast to rise modestly to 5.4% in 2010, supported by continued growth in agriculture and services. The start of large-scale oil exports in 2011 will push up economic growth to 12.5%.
• Foreign-exchange earnings from the oil sector will help to support the cedi, although persistent fiscal and current-account deficits and low foreign reserves will see the average exchange rate depreciate modestly.
• The effects of expansionary government spending and a weak currency are expected to keep inflation in double digits, although it will decline steadily owing largely to a tighter monetary policy and lower food prices.
• An upward revision to our forecast for gold prices in 2010—reflecting volatility in other asset markets—will translate into a lower current-account deficit of 14% of GDP (previously 17.1% of GDP).
• The start of oil exports in 2011 will help to bring the current-account deficit down further, although growing imports and large profit remittances from the oil sector will keep it relatively high, at 9.4% of GDP (previously 11.5% of GDP).

Monthly review

• A probe into the sale of Ghana Telecom to Vodafone by the previous regime in 2008 has uncovered serious malfeasance. Numerous laws were broken in the setting-up of the deal, and the payment received was considered too low.
• The new government intends to re-engage with Vodafone to try to secure a better deal, although this could necessitate a prolonged legal battle.
• Another probe has been set up to investigate the operations of West Africa's biggest dry dock facility, PSC Tema Shipyard Company. Unions and civil society groups have alleged serious problems at the port.
• The government has provoked public resentment by approving another increase in fuel prices. The government wants to remove the subsidy element to reduce the drain on public finances, but this is an unpopular policy.
• The government has also announced an upward adjustment in the producer price of cocoa. However, smuggling is set to remain a problem, as prices in some of Ghana's neighbours remain higher.
• There has been a steady improvement in macroeconomic indicators in recent months, implying that the worst of the recent economic troubles are over.

This report covers the following industry codes:
SIC Code: 1
NAICS Code: 11