The International Monetary Fund (IMF) is projecting almost 9% economic growth rate for Ghana in 2018.
This was captured in the Fund’s latest World Economic Outlook report released in Washington D.C on the sidelines of the Annual IMF/World Bank meetings.
The report gave an outlook of economic growth for almost 190 counties and direction of the global economy. It noted that “our upgrade owes to brighter prospects for the advanced economies, whereas for 2018’s positive revision, emerging market and developing economies play a relatively bigger role.
Notably, we expect sub-Saharan Africa, where growth in per capita incomes has on average stalled for the past two years, to improve overall in 2018”.
Reasons for Ghana’s growth
According to the IMF, the projection is based on pick-up in crude production and some policy measures that government is implementing to stabilize the economy.
The forecast is in line with other development partners and some rating agencies that have also forecasted a pick-up in economic growth from next year.
This is based on the favorable International Tribunal for the Law of the Sea (ITLOS) ruling and its impact on Foreign Direct Investments for Ghana. The projection could be Ghana’s strongest economic growth for a while.
Projection for this year
Despite the strong projection for 2018, the IMF is projecting a 5.9% economic growth for this year. This is a little bit lower than government’s own end-of-year growth of 6.3% as captured in the revised 2017 budget estimates.
The Fund’s estimate for this year was influenced by some challenges with commodity prices and its impact on the economy. The Ghana Statistical Service recently put the year-on-year growth rate for the second quarter of 2017 at 9%.
This was due to some significant growth in the mining and quarrying sector, oil and gas production, which recorded 188% growth.
The strong growth projection by IMF would impact positively on revenue from next year as government may be able to raise more taxes from economic activities taking place in the economy.
It could also convince foreign investors that they could be making some good returns if they invest in the economy as result of the economic expansion taking place in the country.
However, for some economists, it could also put a lot of pressure on government to improve tax collections. This is because some of these economists believe that Ghana’s tax-to-GDP ratio is still not good enough.