Economy set to remain resilient

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•    And achieve robust growth

THE Ghanaian economy is set to remain resilient and achieve robust growth in 2020, with the return of the financial sector to profitability, buoyed by improved performance in the services sector among other improving indicators.

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The International Monetary Fund (IMF), economists, market watchers have tagged 2020 to be “another year of strong growth.”
On the outlook for the Ghanaian economy in 2020, the IMF said: “medium-term prospects are favourable, with robust growth driven mostly by the extractive sector.”
The Fund, however, cautioned that election-related spending pressures in 2020 constituted the main risk to sustained growth.
With the government’s projected 6.8 per cent Gross Domestic Product (GDP) growth for 2020 which is slightly lower than the 7 per cent projected for 2019, the Institute for Fiscal Studies (IFS) is of the view “there are good reasons for growth to remain strong in 2020.”
Economist and Research Fellow at the IFS, Mr. Leslie Dwight Mensah maintained that the services sector had been improving its performance, especially on the back of the recovery of the financial sector from its woes.
Mr Mensah explained that the financial sector had for three years been a drag on the performance of the services sector due to the crisis in the former, but “now that we have seen some calm restored in the financial sector, many depositors who hitherto could hardly access their funds can now do so.”
Indeed, even though stock of Non-Performing Loans (NPLs) increased nominally to some GH¢7.2billion by October 2019 from GH¢ 7.1billion same period 2018, the Bank of Ghana (BoG) maintains that higher growth in total loans contributed to a lower NPL rate of 17.3 per cent in 2019 from 20.1 per cent for the same period in 2018.
Private sector credit expanding
The gradual growth in credit to the private sector in 2019 was, according to Mr. Mensah likely to pick up some more in 2020, especially on the back of recent measures being considered by the BoG to improve lending to the private sector.
Indeed, data from the BoG said private sector credit continued to improve and recorded a 14 percent annual growth in October 2019, compared with 11.4 percent for the same period of 2018.
In real terms, private sector credit expanded by 5.9 percent compared with 1.7 percent over the same comparative period.

Solid foundation laid for sustained growth in 2020 and beyond
Investment Banker and Chief Executive Officer (CEO) of C-ENERGY Ghana Limited, Mr. Michael Cobblah said: “the foundation for accelerated growth has been laid for 2020 and beyond.”

Mr. Cobblah observed that the 2020 budget was the first, election-year budget to be prepared under the Fiscal Responsibility Act (2018), which places a 5 per cent cap on fiscal deficit, and it is also the first, since 2015, to be done without an IMF programme. “This, therefore, puts pressure on Government to adhere to its fiscal policy framework,” he noted.
In his view, the theme for the 2020 budget, ‘Consolidating the Gains for Growth, Jobs, and Prosperity for All,’ captured and gave meaning to the foundation laid by the economic management team.
The 2020 budget projects a 5.8 percent growth in the services sector. The growth, Mr. Cobblah maintained will be driven by strong performance in the Health and Social Work sectors.
“To achieve or exceed the growth target, we expect professional standards in the health sector to be monitored and enhanced;  then the government’s aim of positioning Ghana as a medical tourism hub will be achieved,” the renowned investment advisor stated.
Monitoring & Evaluation to track the impact of social interventions
According to Mr. Cobblah, there had to be an improvement in the monitoring and evaluation systems to track the impact of social intervention programmes.
“Lessons learned will form the basis for future improvement in such interventions. We also expect this policy to create employment opportunities, expand governments’ tax revenue base, improve productivity and create markets for the agricultural sector and downstream industrial activity,” he added.

Source: Isaac AIDOO,

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