Ghana Country Risk Report Q1 2020

Ghana Country Risk Report Q1 2020

We do not expect Ghana to experience major economic or political instability in the run-up to the 2020 general election, although there is a potential risk of fiscal slippage given the temptation to undertake politically-popular but fiscally expansionary polices. Growing instability in the countries of the Sahel, to the north of Ghana, has already affected Ghana's fiscal position and is likely to remain a growing political risk in the coming quarters.

We expect that real GDP growth will rise from an expected 6.5% in 2019 to 6.6% in 2020, on the back of rising output in the mining, manufacturing and construc-tion sectors. Over our forecast period to 2028 we expect that growth will remain relatively robust, averaging 6.3% between 2021 and 2028, as output grows in the manufacturing, extractive and services sectors.

We believe that the Bank of Ghana (BoG) will keep its key policy rate of 16.00% on hold on balanced risks. Further monetary easing, after a rate cut in January 2019 is unlikely given robust growth reducing the impetus for cuts, while the potentially negative effect that a weaker exchange rate could have on already strained fiscal and external accounts will add caution at the BoG. Likewise, monetary tightening is unlikely given already-high commercial lending rates and rising yields on government bonds that could both rise further in the event of a rate hike by the BoG.

We expect that Ghana's current account deficit will widen in 2020 and 2021 due to weaker oil export revenues, high demand for capital goods imports and primary income outflows to service external debt. The degree to which the current account widens will be limited by robust gold exports.

We expect that the cedi will continue on a path of gradual depreciation in both the short-and-long term, given twin deficits and unsteady investor sentiment.


Executive Summary
Core Views
Country Risk Summary
Economic Risk Index
Political Risk Index
SWOT
Economic – SWOT Analysis
Political – SWOT Analysis
Economic Outlook
Economic Growth Outlook
Ghanaian Growth To Remain Robust And Broad-Based
GDP By Expenditure Outlook
TABLE: GDP GROWTH FORECASTS
TABLE: PRIVATE CONSUMPTION FORECASTS
TABLE: GOVERNMENT CONSUMPTION FORECASTS
TABLE: FIXED INVESTMENT FORECASTS
TABLE: NET EXPORTS FORECASTS
External Trade And Investment Outlook
Ghana's Current Account Deficit To Widen In The Short Term
Outlook On External Position
TABLE: TOP 5 GOODS IMPORTS IN 2018
TABLE: TOP 5 GOODS EXPORTS IN 2018
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
TABLE: NET INTERNATIONAL INVESTMENT POSITION, USDMN
TABLE: CURRENT ACCOUNT BALANCE FORECASTS
Monetary Policy
Bank Of Ghana To Maintain A Neutral Policy Stance In 2020
Monetary Policy Framework
TABLE: MONETARY POLICY FORECASTS
Fiscal Policy And Public Debt Outlook
Ghana's Budget Deficit To Widen On Higher Spending
Structural Fiscal Position
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
TABLE: FISCAL AND PUBLIC DEBT FORECASTS
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings’ Credit Rating. Any comments or data included in the report are solely derived from Fitch Solutions Macro Research and independent sources. Fitch Ratings’ analysts do not share data or information with Fitch Solutions Macro Research.ContentsCurrency Forecast
GHS: Gradual Depreciation Over 2020
TABLE: EXCHANGE RATE FORECASTS
10-Year Forecast
The Ghanaian Economy To 2028
Oil To Boost Growth Over The Long Term
TABLE: LONG-TERM MACROECONOMIC FORECASTS
Political Outlook
Domestic Politics
Broad Political Stability In Ghana Ahead Of 2020 Elections
TABLE: POLITICAL OVERVIEW
Long-Term Political Outlook
Oil: A Critical Test For The Polity
Operational Risk
TABLE: OPERATIONAL RISK
Economic Openness
TABLE: FREE TRADE AGREEMENTS
TABLE: TARIFF AND NON-TARIFF TRADE BARRIERS
TABLE: FREE TRADE ZONES AND INVESTMENT INCENTIVES
TABLE: BARRIERS TO FDI
Utilities Network
TABLE: ELECTRICITY RISKS
TABLE: FUEL RISKS
TABLE: TELECOMMUNICATIONS RISKS
TABLE: WATER RISKS
Global Macro Outlook
Lower Growth, Despite Some Trade Progress
TABLE: GLOBAL MACROECONOMIC FORECASTS (2018-2023)
TABLE: DEVELOPED MARKETS – REAL GDP GROWTH, % y-o-y
TABLE: EMERGING MARKETS – REAL GDP GROWTH, % y-o-y
Index Tables
TABLE: GHANA – MACROECONOMIC DATA AND FORECASTS

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