Macro Forum: The Street View




Economic growth remained strong in Q3 ’18 with GDP increasing 7.4% year-on-year versus 5.4% year-on-year in Q2. All sectors of the economy performed well with agriculture up 5.5% thanks to stronger crop outputs and industry up 11.7%, with a sharp increase in output in the oil and mining subsector. Growth for 2018 is forecast at 5.2% and 5.5% in 2019.

Inflation in December, increased for the first time in four months to 9.4% up from 9.3% in November. The food and non-food indices all played a role across the board in the slightly higher inflation number. Headwinds to inflation include a weaker cedi. However, lower global oil prices have helped to lower domestic oil prices which has helped to mitigate inflationary headwinds. Inflation is forecast at 10% and 9.8% in 2018 and 2019 respectively. The central bank reduced the policy rate by 100bps to 16% on the back of the expectation that inflation will remain within the 6% to 10% target range in the year ahead.

The country is still facing weaker revenue performance and government spending is not being kept under control – as the ruling party is under pressure to deliver on its electoral promises such as the One District One Factory policy and the free high school policy -which will make it challenging to adhere to deficit targets. The fiscal deficit is expected to be between 4% and 4.3%, still lower than the 4.8% of GDP in 2017.

The banking sector has been under pressure over the past few years with three banks declared insolvent in 2017. The Central Bank was forced to intervene and purchased assets of another five banks in 2018. However, more than 20 banks have now met minimum recapitalisation requirements. The Central Bank is meeting other banks on a regular basis in an attempt to stabilise the sector further.

The cedi appreciated by 1.1% over the fourth quarter, ending on GHS4.91 from GHS4.97 to the USD at the start of October 2018.



Real GDP Growth

Source: International Monetary Fund

Ghana FX vs FV

Source: Bloomberg Spot Prices and Actis methodology for Fundamental Value


Source: International Monetary Fund