The World Bank has maintained a modest 1.4% growth rate for Ghana this year, its June 2021 Global Economic Prospects Report has revealed. In January 2021, the World Bank projected the same growth rate, citing slow growth in most sub-sectors of services and industry.
This is despite expected resilience in agriculture sector which it said will not be sufficient to offset the covid-19 pandemic’s lingering adverse impact on the oil and other sectors of the economy.
The Gross Domestic Product (GDP) growth rate will be lower than Sub Saharan Africa’s average of 2.8%, and furthermore in sharp contrast to the International Monetary Fund’s forecast of 4.6% GDP for this year.
Actually, the World Bank predicted 1.1% GDP for the country last year, contrary to the 0.4 percentage point’s growth rate recorded. For many industrial commodity-exporting economies, including Ghana, it said higher oil and metal prices will boost export revenues, but will not be sufficient to close fiscal deficits. This shows that government will not be able to mobilize adequate revenue to reduce the large financing gap since the economic expansion will be slower.
“Growth in industrial commodity exporters—excluding Angola, Nigeria, and South Africa—is expected to pick up to 2.4 percent in 2021-22; however, it will remain 1.5 percentage points below its 2010-19 average (Cameroon, Central African Republic, Democratic Republic of Congo).
On the flip side, businesses must be moderate with their forecast for the rest of the year.
On risk, the World Bank said the high debt burden and fiscal pressures could become more acute and precipitate financial distress in some countries such as Ghana.
“A sudden rise in sovereign borrowing costs could exacerbate fiscal pressures in some countries. Despite still-benign global financial conditions, sovereign borrowing costs have remained higher than before the pandemic in some countries (Angola, Ghana, Nigeria, South Africa). As COVID-19 recedes, budget deficits, which have widened substantially, are expected to gradually narrow (Chad, Ethiopia, Zambia).”
The report further said that “however, high debt burden and fiscal pressures could become more acute and precipitate financial distress in some countries, especially if borrowing costs increase sharply in line with further possible increases in long-term yields on government bonds in advanced economies and major emerging markets and developing economies.
Meanwhile, the Bretton Wood institution has again maintained its modest growth forecast of 2.4% for the country, come next year.