Ghana’s 2022 economic outlook to remain positive; GDP projected to grow by 5.3% – AfDB report

Ghana’s 2022 economic outlook to remain positive; GDP projected to grow by 5.3% – AfDB report

With a projected growth rate of 5.3%, the African Development Bank is forecasting a positive economic outlook for the Ghanaian economy this year.

According to its 2022 Economic Outlook Report released at the Bank’s ongoing Annual Meeting in Accra, it is, however, expecting a slight drop in the rate at which the economy grows.

The projected growth rate for 2022 of 5.3%, is a target lower than the 5.8% set by the government in the 2022 budget.

The growth of the economy in 2022 will, however, also be higher than Sub Saharan Africa’s average of 3.7% in 2022.

The release of the 2022 African Economic Outlook comes against a backdrop of two major global crises: the lingering COVID-19 pandemic and the Russia–Ukraine conflict. The latter erupted as Africa’s economy was on a path of recovery from the ravaging impact of the pandemic, and it threatens to set back the continent’s promising economic prospects.

In the report, the African Development Bank noted that Ghana’s attributed the projected GDP growth of 5.3% for 2022 to the Ghana COVID-19 Alleviation and Revitalization of Enterprises Support Program.

“The outlook remains positive, with projected GDP growth of 5.3% and 5.1% in 2022 and 2023 supported by the Ghana COVID-19 Alleviation and Revitalization of Enterprises Support Programme. Potential inflationary pressure exists due to increased energy and food prices associated with the impact of the Russia–Ukraine,” the report noted.

However, it expressed concern about potential inflationary pressures due to increased energy and food prices associated with the impact of the Russia–Ukraine unrest.

It noted that “Inflation is projected to surge to 15% in 2022 before falling to 9.1% in 2023 and the Central Bank is expected to adopt a tight monetary policy stance.”

Furthermore, the fiscal deficit is projected to narrow further to 12.8% of GDP in 2022 and 10.3% in 2023, spurred by revenue-enhancing reforms. The current account deficit is projected to narrow to 1.6% of GDP in 2022 and 3.3% in 2023, on increased exports.

On climate change, issues and policy options; the African Development Bank noted that climate change stemming from erratic rainfall, rising temperatures, drought, floods, a rising sea level, and tidal waves presents significant threats to agriculture and energy, as well as climate-induced migration.

It noted that agriculture and energy, which both depend heavily on rainfall, are thus highly susceptible to fluctuating rainfall.