The International Monetary Fund (IMF) has revised downwards its earlier 6.8 per cent Gross Domestic Product (GDP) projection for the Ghanaian economy in 2018 to 6.3 per cent.
According to the Bretton Woods institution’s latest World Economic Outlook Report on World Economy and Financial Surveys, the economic growth will however be higher at 7.6 per cent GDP in 2019 but will gradually dip to about 5.1 per cent GDP by 2023.
In its latest World Economic Outlook Report on World Economy and Financial Surveys, the Bretton Woods institution said inflation will average 8 per cent in 2018 and 2019 respectively. This indicates that prices of items will remain lower while interest rate declines.
It also said Ghana’s current account position will however remain negative though lower than before. It is projecting a current account of -4.1 per cent of GDP in 2018, -4.0 per cent of GDP next year and-3.6 per cent of GDP.
Traditionally, Ghana’s current account position has been relatively high above 7.0 per cent of GDP.
Financial sector developments
Commenting on the recent developments in the financial sector, the IMF said the potential for greater financial market volatility requires fortifying financial systems and avoiding a rollback of the post crisis regulatory reforms. This is applicable to Ghana whereby the Bank of Ghana has liquidated seven banks including the merger of five failed banks.
It added that the macro-prudential tools need to be developed and deployed, and macro-prudential policy buffers need to be rebuilt, including by raising capital buffers, to provide insurance against a future tightening of financial conditions.
Rebuilding Fiscal Buffers
It noted that public debt has increased in emerging markets over the past decade, and is projected to increase further in many of the largest economies over the next five years. This it stated highlights the need to preserve and rebuild buffers.
It said that the composition of spending and revenues should be growth friendly and protect the most vulnerable.
Source: The Finder