Africa’s biggest bank, Standard Bank, has slashed Ghana’s growth rate forecast for 2022 to 3.1%, from the earlier 6.2%.

It has also lowered its 2023 Gross Domestic Product (GDP) forecast for the country to 4.1%, from the earlier 6.8%.

The government in the 2022 Mid-Year Budget Review cut the growth rate for this year to 3.7%, from the earlier projection of 5.8%.

But according to Standard Bank's 'Africa Market Revealed' report, the country’s growth now faces a confluence of downside risks in 2022 and 2023.

“Firstly, the government is running out of external financing options; therefore, public investment in infrastructure is unlikely to underpin growth over the coming year”.

“Secondly, the Ghana cedi’s plummet since January [2022] has further bumped up inflation, which would soften private household consumption over the coming year [2023]. Therefore, the BoG’s Monetary Policy Committee may have to further raise the key benchmark rate to stem rising inflation expectations as well as support the Ghana cedi”, it added.

This, it said may also further reduce private investment over the coming year. 

It also pointed out that the country’s growth rate also faces rising domestic fuel prices, and with no fuel subsidies to offer any support.

“GDP growth also faces rising domestic fuel prices, and with no fuel subsidies to offer any support. Still, the gold sector may offer some upside to our outlook. Off its low base of 2021, gold production should therefore recover, based on key mines’ forecasts”.

Balance of payments deficit to widen to 4.1% of GDP in 2022

Standard Bank said the balance of payment deficit will widen to 4.1% of GDP in 2022, and then narrow to 2.6% in 2023.

“We now expect the C/A deficit to widen to 4.1% of GDP in 2022, then narrow to 2.6% in 2023. Still, financing a wider C/A deficit in 2022 would prove near impossible due to the lack of external funding”.

The Ghanaian economy expanded by 3.3% in the first quarter of this year.