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Ghana Country Risk Report Q2 2015

Ghana Country Risk Report Q2 2015

Core Views

Economic growth in Ghana will be buoyant over 2015-2018 thanksto rising oil production and strong investment inflows – the latterencouraged by IMF policy oversight.

Foreign investment inflows will be robust thanks to Ghana's abundantnatural resources and relative political stability.

The current account deficit and fiscal deficit will remain key structuralweaknesses in the economy.

Peaceful protests against power shortages and economic hardshipwill take place in 2015. Ghanaians are wary of the conditions thatmay be attached to IMF support.

Major Forecast Changes

We have revised our forecast for the current account following thedramatic drop in oil prices in the final months of 2014. We now projecta deficit of 11.8% of GDP in 2015, versus a previous 8.4% forecast.


Executive Summary
Core Views
Major Forecast Changes
Key Risks To Outlook
Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Index
Domestic Politics
On The Ground: Power Shortages Raising Political Temperature
Our analyst on the ground in Ghana highlights that frequent, severe power shortages are putting the government under pressure.
Protests are likely to take place over the next three or four months until emergency power supplies are installed. The protests will be
relatively peaceful and contained though.
Table: Politic al Overview
Long-Term Political Outlook
Oil: A Critical Test For The Polity
Ghana's political risk profile is relatively favourable, especially in the context of West Africa. However, oil revenues require careful
management, presenting a formidable test for the government over the coming decade.
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Index
Economic Activity
Growth Will Pick Up Despite Fiscal Challenges
Economic growth in Ghana will accelerate, hitting 5.8% in 2015 and 8.0% in 2016 thanks to rising oil and gas production and robust
investment inflows. Our forecasts are predicated on two key assumptions: a deal is reached with the IMF, and lower oil prices have no
meaningful impact on domestic production of oil and gas.
Table: Eco nomic Acti vit y
Balance Of Payments
Past The Worst
Ghana's current account deficit will increase significantly in 2015, to 11.8% of GDP, from an estimated 9.2% of GDP in 2014, owing to
reduced commodity export earnings. However, investment inflows will grow as confidence improves, meaning that the overall balance of
payments position will strengthen.
Table: Current Accou nt
Exchange Rate Policy
GHS: The Reprieve Is Over, Depreciation To Resume
The Ghanaian cedi will resume its long-standing depreciatory trend, owing to a wide current account deficit. Although foreign investment
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Table: Exch ange Rate
Table: BMI Currency Forecast
Banking Sector Outlook
Overheating Banking Sector To Cool Off
Growth of banking sector assets, which has been robust despite economic malaise in Ghana, will slow over the course of 2015 as
higher interest rates, increasing non-performing loans and a loan-to-deposit ratio approaching unsustainable territory weigh on loan
growth.
Chapter 3: 10-Year Forecast
The Ghanaian Economy To 2024
Oil To Boost Growth Over The Long Term
We hold a positive long-term outlook on Ghana, forecasting that annual real GDP growth will average more than 6.0% over the coming
10 years. The ramping up of domestic oil production will provide significant impetus to the economy, allowing the mitigation of fiscal and
current account drags.
Table: Lo ng-Term Macroeco nomic Forecasts
Chapter 4: Operational Risk
SWOT Analysis
Operational Risk Index
Operational Risk
TABLE : Operatio nal Ris k
Availability Of Labour
Table: Sub -Saharan Af ric a - Availabi lit y Of Labou r Ris k
Table: Top 10 Sou rce Cou ntries fo r Mig rant Wo rkers
Crime Risk
Table: Crim e Statistics
Chapter 5: BMI Global Assumptions
Global Outlook
Weaker EMs To Weigh On Growth
Table: Glob al Assumptio ns
Table: Develop ed States, Real GDP GrowtH, %
Table: BMI VER SUS BLOOMBER G CONSEN SUS REAL GDP GROWTH FORE CASTS, %
Table: Em ergi ng Markets , Real GDP Growth , %

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