Moody’s forecasts 4% growth rate for Ghana in 2021

Moody’s further stated that Ghana’s expected growth rate of 4% will place it 10th on the African continent and 3rd in West Africa.

The report added that Niger will be the fastest growing nation on the continent with a projected 8% GDP, followed by Mauritius which is expected to grow at 7.8% and Ivory Coast with 6.4% growth rate.

According to Moody’s 2021 Sub-Saharan Africa Outlook report, the Gross Domestic Product growth rate will be lower than the over 5% consistent growth rate recorded by the country over the last decade.

The Outlook report is in direct contrast to the 1.4% projection by the World Bank’s 2021 Global Economic Prospects.

Moody’s said the shock from COVID-19 pandemic, elevated liquidity threat as well as weaker institutions and governance are the three key issues to be keenly watched this year.

It further said the expected lower growth will lead to depressed revenue from already low revenue bases.

“Low domestic revenue mobilization will continue to plague Sub-Saharan Africa sovereigns particularly Nigeria, Ethiopia, Ghana (B3 negative), Tanzania and Zambia, many of which have revenue/GDP ratios well below 20%,” it stressed.

Furthermore, “lower revenue as a result of the shock [COVID-19], coupled with spending pressures (both health-related and some fiscal stimulus) will lead to recurring deficits and will delay fiscal consolidation”, it emphasised.

Ghana has a revenue to GDP ratio of below 20%, and therefore the underperforming revenue is a major concern which cannot meet finance chunk of the government expenditure.

It, however, said favourable gold prices will likely support Ghana’s current account balance, boosting foreign inflows and stabilizing the cedi.