Ghana’s growth outlook for 2022 remains positive amid government’s continuous support for growth drivers across the various sectors, asset-management company Databank has said in its Ghana Market Review and Outlook for 2022 report.
However, the company predicted a growth range of a lower band at 4.9 percent to an upper band of 5.9 percent with a midpoint forecast of 5.4 percent – which falls short of government’s targetted 5.8 percent.
“We anticipate continued recovery in overall real GDP growth in 2022, with a forecast growth range of 4.9 percent – 5.9 percent (midpoint forecast of 5.4 percent versus a government target of 5.8 percent). With continued and targetted government support for the growth drivers, we remain optimistic about Ghana’s growth prospects in 2022,” the investment firm said.
For the agriculture sector, Databank anticipates continued resilience with a projected growth of 4.8 percent in 2022 against a government target of 5.3 percent, largely driven by targetted government interventions in the crops and fishing sub-sectors.
The agriculture sector continued its impressive run with expansions across all four sub-sectors in the third quarter of 2021, with the heavily weighted crops sub-group as the anchor. The cocoa sector grew by 27.6 percent in each of the first three quarters, culminating in a record output of over one million metric tonnes during the 2020/2021 cocoa season.
Largely, the sector growth was immensely helped by government interventions in pest and disease control, Hi-tech pruning, hand pollination, and supply of drought-tolerant, early-bearing and high-yielding seeds.
The industry sector in 2021 contracted by 2 percent, year on year (YoY), owing to an 11.2 percent contraction in the extractive sub-sector, which capped the overall gross domestic product (GDP) growth momentum. The resultant effect was the 7th consecutive quarter of decline in the extractive sub-sector, which continues to cloud recovery in the other industrial sub-groups such as manufacturing.
However, Databank further projects a rebound in the extractive sector with continued expansion in manufacturing and construction in 2022 to propel industry growth to 5.8 percent in 2022, compared to a 6.3 percent government target.
Notwithstanding growth projections for the industry, the asset management company highlights that the reduction of withholding tax on sale of unprocessed gold from 3 percent to 1.5 percent in 2022 could reduce the under-declaration of gold output and export.
“This government intervention should boost official gold production records and support a recovery in the extractive sector with a forecast growth rate of 7.2 percent, above government’s target of 6.5 percent.
“We believe the outlook for oil and gas remains uncertain. While the higher crude oil prices support output growth, a global resurgence in COVID cases continues to pose a downside risk to demand and output,” it stated.
The services sector is forecasted to grow by 5.2 percent in 2022 – below government target of 5.6 percent, in view of the gradual expansion in vaccine coverage which largely supports the ongoing recovery in the hotels and restaurants, travel and tours, education and trade sub-sectors.
Risk to growth outlook
The investment company cautioned that the raft of taxes in the 2022 budget could further tighten the operating environment for businesses, thus weighing on the growth prospects.
“The proposed E-levy and a reversal of the benchmark value reduction could pose severe downward pressure to capital growth and profitability in 2022. We perceive downside risk to growth in the ICT sub-sector as the E-levy potentially weighs on the use of mobile money (MoMo) and other digital payment platforms in 2022,” Databank said.
Consequently, it expects growth in the ICT sub-sector to decelerate to 10 percent in 2022 from 20 percent in 2021.