Economy Meets Targets

Dr. Anthony Akoto The country's economic indicators could be heading for yet another good time this year, as most of them have been pointing to good directions despite the global food crisis and the volatile crude oil prices.

Over the last year, the world has seen soaring food and oil prices, with crude oil nearing a record $147. This has caused a catastrophe in most emerging and developing countries with sharp rises in their inflations- average change in general price levels.

However Ghana's economy, for the first six months, remained resolute according to the Monetary Policy Committee (MPC) of the Bank of Ghana report.

In that report, though the oil import bill rose to $1.257 billion, a 25.4 percent of total imports, most of the economic indicators performed creditability.

Gross International Reserves at the end of June 2008 was $2.3 billion, translating into an average of import cover of 2.4 months while total merchandised exports for the first half of the year amounted to $2.885 billion, compared with US$2,142 billion, a growth of 34.7 percent.

An African research report, released recently by Renaissance Capital, an investment bank group, indicated that Ghana's Gross Domestic product (GDP) growth is estimated to increase to $16.8 billion, from last year's $14.9 billion.

The forecast, according to the report, represents a growth of 7.1 percent, marginally higher than the 7.0 predicted by the government.

In addition, the report stated that GDP in dollar terms could accelerate to $25.4 billion in 2012, by which time Ghana will be producing oil in commercial quantities.

Though the Ghana Statistical Service (GSS) is yet to release figures for the growth rate this year, CITY & BUSINESS GUIDE investigation indicate that Ghana would meet the 7.0 percent GDP.

Renaissance Capital's report noted that rapid growth, in credit and public spending, has resulted in a strong increase; the basis of the expected growth.

Similarly, some analysts predict that the country's secondary reserves, a criteria of the West Africa Monetary Zone (WAMZ) for use of single currency by five ECOWAS countries, may be heading towards $3 billion and this would translate into an import cover of 3.0 months.

This is the result of improved exports, which have been fueled by this year's demands on cocoa, the divestiture of Ghana Telecom and a sharp drop in the price of crude oil, which traded at $72.0 last Friday.

Inflation, which increased sharply at the beginning of the year from 12.8 percent in January to 18.4 percent in June has since then deteriorated to 17.89 percent.

Officials of the GSS are confident that should the prevailing conditions continue, the inflation rate will decline further.

Renaissance Capital again predicted that annual inflation would reach 16.5 percent this year and could easily fall further to 14 percent in 2009.

These surveys signify that the country's economy has been resolute in spite of the recent global financial turmoil that has thrown many of the 'top-notch' countries in the world economies into recession.

The banking sector, which is the dominant player in the services sector, is expecting positive times with the prospect of new banks expected to join the train.

Total assets of the banking industry stood at GH¢8,437 billion in May 2008, a 4.4 percent growth over the level at the end of March 2008.

The growth is expected to increase significantly as most of the banks have posted impressive performances after the third quarter of the year.

With the MPC of the Bank of Ghana expected to meet to evaluate the performance of the economy, where they will make the necessary projections for the ensuing months, most analysts will be hoping for much better times especially, as the nation goes to the polls on December 7. By Charles Nixon Yeboah