EIU projects economy to grow by 6.5% in 2019, against government target of 7.6%

May 17, 2019 / Comments (0)

The Economist Intelligence Unit (EIU) has projected the country’s economy to grow slower than government’s own forecast for 2019.

According to the research institution’s country report for Ghana released this month, the economy will grow by 6.5 percent, which is a 1.1 percentage point lower than government’s target of 7.6 percent.

The report largely attributed the cut in growth rate to a projected slow growth in agriculture. It has projected the agriculture sector to grow by 3.4 percent in 2019 compared to the 4.8 percent growth recorded last year.

“Consumer demand will remain robust during the year, helped by the lower cost of credit, but ultimately constrained by low value added in the agricultural sector—which serves to limit wage growth for workers—and price rises moderating consumer sentiment. Accordingly, we forecast overall GDP growth of 6.5 percent in 2019,” the EIU report said.

However, the research institution expects growth to ease to 5.7 percent in 2020 as the country is affected by weaker global economic conditions—weighing on investment flows into the country—although, it adds, government and private consumption levels will rise slightly ahead of the election that year.

Commenting on this, professor of economics at the University of Ghana, Prof. Peter Quartey said the EIU forecast is within range as it does not deviate too much from government’s target.

“I will lean more towards government forecast because they are running the economy and they know what policies they have put in place. But I think the EIU forecast is also within range—anything between 6.5 to 7 percent growth is within range,” he told the B&FT in an interview.

Meanwhile, PWC’s analysis of the 2019 budget says the growth target of government is ambituous but achievable given some policy interventions implemented by government.

“Government has projected the Ghanaian economy to grow at 7.6 percent in 2019. Though ambitious, the projected GDP growth rate of 7.6 percent for 2019 is expected to come from the implementation of government’s industrialisation programmes such as 1D1F and the widening of the tax net,” the PWC said.

Other institutions such as IMF and World Bank have all set different growth targets for the country.

In the World Bank projection, the country’s economy will witness strong growth in 2019, largely driven by an expected increase in oil and gas production, saying the economy will grow by 7.6 percent— the same as government’s target.

The IMF on the other hand, says Ghana will be the fastest growing economy in the world, with growth rate expected to hit 8.8 percent.