World Bank revises Ghana’s 2021 GDP down to 1.4%
The World Bank has revised Ghana’s Gross Domestic Product (GDP) growth to 1.4%, from an earlier 4.2% for 2021.
In January, the Bretton Woods institution had projected a 4.2% growth rate for the country, citing a recovery in oil prices and its COVID-19 recovery programme as key drivers.
At the time, the World Bank said, “Rapid recoveries of oil prices complimented by the expected implementation of the COVID-19 Alleviation and Revitalization of Enterprises Support (Ghana CARES) Programme will likely result in the realisation of the upside scenario with 2021 projected growth of 4.2%.
It added that there would also be a medium-term (2021-2023) average growth of 4.5%.
However, in its June Global Economic Prospects Report, the World Bank has reduced slashed the GDP growth.
After evaluating the country’s Debt Sustainability Analysis (DSA) in April 2020, the bank concluded that “Ghana remains at high risk of debt distress.”
Amidst this finding, the June report also reports cautioned that the increase in debt would put pressure on the country, leading to the new forecast.
“A sudden rise in sovereign borrowing costs could instigate financial pressures in some countries (including Ghana), and high debt burdens and fiscal pressures could become more acute,” the World Bank warned.
It also noted that should there be a drop in oil prices, the revenues for some oil exporters would be dented, which would also affect the growth rate.
Although the 1.4% projection is an improvement on the 1.1% recorded last year, it is less than the 6.5% recorded in 2019.
Nonetheless, the new projection also makes the country one of the nine countries in Sub-Saharan Africa with the least projected growth rate for this year.
The World Bank projects negative growth rates for South Sudan (-3.4) and the Congo Republic (-0.1).
The other countries whose growth rate would be slow are Comoros (0.2), Sudan (0.4), Angola (0.5), Central African Republic (0.7), Chad (1.0) and Eswatini (1.3), respectively.
The Gross Domestic Product (GDP) growth rate would be lower than Sub-Saharan Africa’s average of 2.8%, which also is a sharp contrast to the International Monetary Fund’s (IMF) forecast of 4.6% GDP for this year.
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The report stated that “Growth is forecast to resume to 2.8% this year and firm to 3.3% in 2022, underpinned by stronger external demand, mainly from China and the United States, higher commodity prices, and containment of COVID-19.”
The growth in industrial commodity exporters excluding Angola, Nigeria and South Africa is expected to pick up to 2.4% between 2021 and 2022.
Meanwhile, for agricultural commodity exporters, growth is forecast to resume at a faster pace of 4.5% a year on average in 2021 to 22.
Ghana’s risks are to the downside, just as Nigeria and South Africa due to upgrade in national vaccine distribution systems.
Output in Sub-Saharan Africa shrank to 2.4% in 2020 due to the COVID-19 pandemic, a milder-than-expected recession.
Nonetheless, growth has gradually resumed this year, reflecting positive spillovers from strengthening global economic activity, including higher oil and metal prices.
Regarding the containment of the COVID-19, the report said some progress had been made, especially in Western and Central Africa.
“At the same time, the pace of vaccinations could surpass expectations, restoring consumer and business confidence and strengthening the recovery,” the report stated.
Ghana’s economy contracted by 3.2% and 1.1% in the second and third quarters of 2020, respectively, pushing the country into a recession for the first time in 38 years.
It, however, showed early signs of recovery in the second half of 2020 as business sentiments improved with the ending of lockdowns.
The year-on-year performance in the agriculture, manufacturing and tradable services sectors also saw some strong recoveries in the third quarter of 2020.