Economist, Dr. Patrick Asuming, says the slash of Ghana’s growth rate forecast to 3.1 percent by Standard Bank is an indication that the government has not gotten a handle on how to save the economy.
Africa’s biggest bank, Standard Bank, has slashed Ghana’s economic growth rate forecast for 2022 to 3.1 percent from the earlier 6.2 percent.
It has also lowered its 2023 GDP forecast for the country to 4.1 percent from the earlier 6.8 percent.
Dr. Asuming, reacting to this, believes this shows the government is not doing much to save the economy.
“It seems to me the government hasn’t really gotten a handle on how to solve our problems. A big chunk of our problems is coming from problems with government finances itself. So that already constraints the ability to use its spending power to boost economic activity. It appears that the revenue measures haven’t worked very well,” he lamented.
He however insists the government must reallocate its expenditures to stabilize the economy.
“If government really wants to do anything, it might want to reallocate its expenditure and consider cutting some aspects of its spending. We need to reallocate our spending pattern so that we spend more on the productive sectors that will help boost our long-term goals.”
This forecast from the Standard Bank is lower than the government of Ghana’s revised growth rate for this year of 3.7%.
According to the bank’s ‘Africa Market Revealed’ report, the country’s growth now faces a confluence of downside risks this year and the next.
Standard Bank said the balance of payment deficit will widen to 4.1% of GDP in 2022, and then narrow to 2.6% in 2023.
“We now expect the C/A deficit to widen to 4.1% of GDP in 2022, then narrow to 2.6% in 2023. Still, financing a wider C/A deficit in 2022 would prove near impossible due to the lack of external funding”.
Furthermore, Standard Bank highlighted the positive impact an agreement with the IMF will have on the Ghana cedi.
It however insists till that happens, the cedi will continue to weaken especially as global risk worsens further.
The bank also expects the Monetary Policy Committee of the Bank of Ghana to hike its key policy rate by a further 100-150 bps in 2022 amidst the country’s inflationary pressures.