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World Bank forecasts 20% growth for Ghana’s economy, but Standard Bank projects 16.3%

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Ghana’s economy has been in focus since the country began commercial oil production on December 15, 2010, and different predictions for growth are being made.

Seen as the fastest growing in the world, the World Bank in January this year, projected that the country’s economic growth rate will be around 13.4% in 2011.

The International Monetary Fund (IMF) said with the start of oil production, it expects Ghana’s economic growth to exceed 13% in 2011.

“Ghana’s economy has recovered strongly since the start of the IMF-supported program in 2009. Economic growth is expected to exceed 13% this year, boosted by the start of oil production as well as strong activity in other sectors of the economy,” said Ms Christina Daseking, IMF official, in a statement September 2, 2011.

According to the African Economic Outlook (AEO), a product of the African Development Bank, the OECD Development Centre, the United Nations Economic Commission for Africa and the United Nations Development Programme, the country’s economic growth has remained strong with real GDP growth reaching an estimated 5.9% in 2010 compared to 4.7% in 2009 with projected growth of 12% in 2011.

“Growth prospects are even brighter as real GDP growth of 12.0% and about 11.0% are projected for 2011 and 2012 respectively, largely on account of the start of oil production in commercial quantities in December 2010,” said the Outlook.

The government of Ghana through the Ministry of Finance and Economic Planning on September 15, 2011 issued a statement saying the economy will grow 14.1% this year.

However on September 14, 2011 report by the Bloomberg news service cites the World Bank making another projection for the Ghanaian economy.

According to the World Bank, Ghana’s economy may expand by 20% this year as the start of oil production for export, along with high prices for cocoa and gold, boost revenue.

“First-quarter growth was 23 percent and oil, gold and cocoa have since enjoyed very high prices on the international market,” Dante Mossi, senior operations officer of the World Bank’s office in Ghana told Bloomberg in an interview in Accra. He added “The trend will follow.”

In yet another development, Standard Bank, mother-company of Stanbic Bank Ghana has projected a 16.3% growth for Ghana’s economy.

The bank says in it latest report titled “African Markets: navigating slowing global growth currents”, that almost half of the 20 African economies included in the Africa outlook are expected to grow in excess of 6.0% in 2011, “with growth in the fastest growing economy in the world, Ghana, reaching 16.3%.”

The South Africa-based bank indicated that growth will slow down to 8.25% in 2012 but will be doing very well by global standards.

The World Bank, however forecast a 10% drop in Ghana’s economic growth in 2012.

“We see growth moderating to an annual average of 16.3% y/y in 2011, easing further to around 8.25% in 2012. According to provisional figures for the first quarter of 2011, Ghana’s real GDP grew 23.0% y/y up from 9.5% y/y in the fourth quarter of 2010 making it the fastest growing economy in the world,” said Standard Bank.

The reason for the 16.3% growth acceleration, Standard Bank says is “The fundamental equity story for Ghana remains appealing: the economy is arguably the fastest growing in the world and fiscal and monetary policy continues to promote a relatively stable backdrop for future growth.”

“Ghana’s entire share equity index has dropped 2.0% taking the year-to-date performance to a positive 12.5%. This compares with downside of 12.2% and 11.2% year-to-date for the MSCI Emerging Markets index,” the bank added.

It says the Ghanaian cedi has basically traded sideways against the dollar in a 1.50-1.54 range since the sharp move in January 2011 and core scenario is for this range to persist in coming months and probably into next year.

Standard Bank’s African outlook includes comprehensive data and analysis for twenty African economies across the continent. These include Angola, Botswana, Côte d’Ivoire, DRC, Egypt, Gabon, Ghana, Kenya, Malawi, Mauritius, Mozambique, Namibia, Nigeria, Rep of Congo, Senegal, South Africa, Tanzania, Tunisia, Uganda and Zambia.

By Emmanuel K. Dogbevi & Ekow Quandzie

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