Market analysts have expressed optimism that government will meet its revised 2021 growth target for the economy, given the strong growth in the third quarter of last year on the back of continued strong momentum in economic activity in the fourth quarter amid the yuletide season.
Ghana’s economy showed its strongest performance in the pandemic era, as the third quarter 2021 gross domestic product (GDP) expanded by 6.6 percent year on year (y/y) compared with 5.1 percent in the second quarter of 2021 and a contraction of 3.4 percent in quarter three of 2020 respectively. On average, the first three quarters of 2021 showed a growth rate of 5.3 percent.
Per the Ghana Statistical Service (GSS) GDP figures, continued improvement of economic activities in the agricultural and services sectors continue to spur recovery – although the industrial sector remains sluggish.
Sharing his views on the economic growth prospects in an interview with B&FT, Senior Economist with Databank Courage Kingsley Martey expressed optimism of government attaining the 2021 revised GDP target of 4.4 percent, based on the strong performance in quarter-three of 2021.
“The strong growth in the third quarter is encouraging and raises the prospect of achieving the revised target of 4.4 percent for 2021. And if the support from the festivities-related spending is strong enough, we won’t be surprised to see a full-year growth outturn above the revised target of 4.4 percent,” Mr. Martey stated.
Apakan Securities Limited, in its analysis of the third-quarter economic growth, stated optimism about a strong recovery of the economy in 2021, in view of the various growth-supportive policies implemented by both monetary and fiscal managers of the economy.
“The revised growth estimates from the Ghana Statistical Service also suggests that the 4.4% government target for growth in 2021 may be achievable after all, if the current rate of recovery is sustained,” the investment firm suggested. “With the industrial sector, the third-quarter data showed an improvement from the previous quarters. Our expectation is for the sector’s emergence from its recession by Q4-2021.
“However, global crude oil prices hitting highs around October could negatively impact the year-end growth. Also, the policy rate hike of 100bps by the central bank in late November to contain inflationary pressures could be of some negative consequence to growth,” Apakan cautiously stated.
Government, in its response to a Bloomberg article on the nation’s debt situation, remained positive of continued strong momentum in economic activity for quarter-four in 2021.
“…given the strong underlying fundamentals of the Ghanaian economy and our rapid rebound from effects of the COVID-19 pandemic – as evidenced by the healthy GDP growth of 6.6 percent for the third quarter alone and an average of 5.2 percent for the first three quarters of 2021. While the end-year growth targets for 2021 have been revised to 4.4 percent, high-frequency indicators suggest a continued strong momentum in economic activity in Q4,” the Ministry of Finance stated in its response statement.
The ministry reassured investors that Ghana’s fundamentals remain strong, as attested to by the growth performance in Q3-2021; the Ghana Revenue Authority exceeding its target in 2021; and a strong reserves position, at 4.9 months import cover as of November 2021.