The International Monetary Fund (IMF) is projecting an 8.8 per cent end of year growth rate for Ghana in its World Economic Outlook report released in Washington D.C, Tuesday. 

According to the Fund, Ghana economy would be largely influenced by pick up in commodity prices, oil as well as some policy, response measures that government is expected to implement this year.

What is the IMF Global Economic Outlook report?

The 198 report put together by the research department of the IMF looks at the global economy, opportunities, threats as well as reviewing the economics 189 members of the Fund. It is based on historical data and projection based on information picked up by IMF country desk offices in the contest of their mission to the member countries.  

IMF and its global forecast for Ghana

This can be described as one of its highest forecasts by the IMF for the country, since 2011, when the Fund projected about 17 per cent growth rate for Ghana. In 2012 the IMF also projected a 9 per cent growth rate for Ghana.

IMF’s projection against Ghana’s own projection

From the IMF World Outlook Report is it clear that Fund is more bullish and optimistic about the growth of the economy than even government.

While government in the 2019 budget is projecting an overall growth of 7 per cent, the IMF believes Ghana would end the year with higher growth than what the Finance Minister, Ken Ofori Atta has outlined for this year.

The IMF is the second, international institution after the World Bank that has shown optimism about Ghana’s economy expanding more than what government has projected. 

But a source close to government has maintained that it might be prudent to be moderate with such macro-economic indicators, rather than being too optimistic.

Possible impact of this projection by the IMF on the economy

For some, the development could convince investors outside the country about some good returns on their capital, depending on the sectors that would drive this expansion. Therefore, this could impact positively on capital attraction to the country in the coming months.  

Others have also maintained that if the economy would expand by more than 1 per cent than what government is projecting, then it means those sectors would be driving the growth in job creation. 

However, others have also argued that this is just a forecast and that it could come to pass or it may not be realized at all.

Some of these analysts have maintained that Ghanaians should be moderate about their expectations despite the strong growth forecast.  

IMF and Ghana’s inflation outlook for this year

The IMF in the World Economic Report is also projecting an end of year inflation outlook of 8.7 per cent for 2019 after it projected a 9 per cent inflation for end of 2018.

What the report said about the global economy.

After strong growth in 2017 and early 2018, global economic activity slowed notably in the second half of last year, reflecting a confluence of factors affecting major economies.

China’s growth declined following a combination of needed regulatory tightening to rein in shadow banking and an increase in trade tensions with the United States.

The euro area economy lost more momentum than expected as consumer and business confidence weakened and car production in Germany was disrupted by the introduction of new emission standards; investment dropped in Italy as sovereign spreads widened; and external demand, especially from emerging Asia, softened.

Elsewhere, natural disasters hurt activity in Japan. Trade tensions increasingly took a toll on business confidence and, so, financial market sentiment worsened, with financial conditions tightening for vulnerable emerging markets in the spring of 2018 and then in advanced economies later in the year, weighing on global demand.

Conditions have eased in 2019 as the US Federal Reserve signalled a more accommodative monetary policy stance and markets became more optimistic about a US-China trade deal, but they remain slightly more restrictive than in the fall.