The International Monetary Fund (IMF) has revised downwards its earlier 6.8 per cent Gross Domestic Product (GDP) projection for Ghana’s 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, economic growth will however be higher at 7.6 per cent in 2019 but will gradually dip to about 5.1 per cent by 2023.
In its latest World Economic Outlook Report on World Economy and Financial Surveys, the Bretton Woods institution said inflation would 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’s 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.
In economics, a country’s current account is one of the two components of its balance of payments.
The current account consists of the balance of trade, net primary income or factor income (earnings on foreign investments minus payments made to foreign investors) and net cash transfers that have taken place over a given period of time.
IMF disclosed that global growth is projected at 3.7 per cent in 2018 and 2019, 0.2 percentage point below the April 2018 forecast, well above its level from 2012–16.
Global growth is expected to remain steady at 3.7 per cent in 2020, as the decline in advanced economy growth with the unwinding of the US fiscal stimulus and the fading of the favorable spillovers from US demand to trading partners is offset by a pick-up in emerging market.
“Thereafter, global growth is projected to slow to 3.6 percent by 2022–23, largely reflecting a moderation in advanced economy growth toward the potential of that group,” it added.
It said after years of an extremely supportive financial environment, the global economy remains vulnerable to a sudden tightening of financial conditions.
“As discussed in the April and October 2018 GFSRs, measures of equity valuations appear stretched in some markets, investors have moved into riskier asset classes in search of yield, and the share of firms with low investment-grade ratings in advanced economy bond indices has increased significantly,” it explained.
It added that across many economies, government and corporate debt are substantially higher than before the global financial crisis.
The Bretton Woods institution 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 where the Bank of Ghana (BoG) 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 to provide insurance against a future tightening of financial conditions.
–Myjoyonline