Ghana's economy is expected to grow faster than the rest of sub-Saharan Africa in 2011, with a substantial contribution to the expected growth coming from the oil and gas sector.
The World Bank in its latest Global Economic Prospects 2011 report, released last Thursday, projected that Ghana's economy will grow at 13.4 percent in 2011 - 1.4 percentage points higher than government's 12 percent projected growth. But it will slow down slightly to 10 percent in 2012.
The report notes that outside the oil sector, the country's economy will still continue to register strong growth, particularly construction and services as large infrastructure projects are carried out.
With a boost, both in volumes and prices of gold and cocoa, improvements in revenues from tourism, and higher household and government spending, Ghana's economy was expected to grow by 6.6 percent in 2010 but grew by 5 percent. Between January and September exports rose by 40.4 percent and imports by 34.0 percent depicting a healthy trend for the country's balance of payment.
A recent revision of Ghana's GDP data has raised estimates of its income to 60 percent, placing the country in the lower-middle-income bracket.
It is recalled that after the rebasing of the national accounts, leading to a new Gross Domestic Product of GHc 44.8 billion which propelled Ghana to a middle income status, the service sector was found to have eclipsed the agric sector as the major contributor to the GDP.
According to the new computations, agriculture now constitutes 30.20 percent of the economy, as against 37.7 per cent in 2009; industry's representation has been slashed from 27.2 per cent to 18.6 per cent, with services shooting up to 51.1 per cent from last year's 35.1 percent due to the inclusion of the fast growing telecommunications sector.
Re-basing of national accounts involved replacing the old base year (1993) used for compiling the constant price estimates to a new and more recent base year (2006).
The World Bank, however, warned that the inflows from the oil sector, if not well managed, could undermine the incentive structure for agricultural exports.
The report continued that the world economy is moving from a post-crisis, bounce-back phase of the recovery to slower but still solid growth this year and next, with developing countries contributing almost half of global growth.
It estimated that global GDP which expanded by 3.9% in 2010, will slow to 3.3% in 2011, before it reaches 3.6% in 2012. Developing countries are expected to grow by 7% on the average, in 2010, 6% in 2011 and 6.1% in 2012.
"They will continue to outstrip growth in high-income countries, which is projected at 2.8% in 2010, 2.4% in 2011 and 2.7% in 2012", it noted.
Africa, excluding South Africa, has actually fared better. GDP for these countries expanded by an estimated 5.8% in 2010 and is projected to grow by 6.4% in 2011 and 6.2% in 2012. "The rebound was strongest among the metal and mineral exporters, as well as oil exporters, which have benefited from stronger commodity prices", it continued.
The report said, in most developing countries, GDP has regained levels that would have prevailed had there been no boom-bust cycle. While steady growth is projected through 2012, the recovery in several economies in emerging Europe and Central Asia and in some high-income countries is tentative. Without corrective domestic policies, high household debt, unemployment, and weak housing and banking sectors are likely to mute the recovery.
Net international equity and bond flows to developing countries rose sharply in 2010, rising by 42% and 30% respectively, with nine countries receiving the bulk of the increase in inflows. Foreign direct investment to developing countries rose by a modest 16% in 2010, reaching $410 billion after falling by 40% in 2009. An important part of the rebound, according to the report, is due to rising South-South investments, particularly originating from Asia.
The pickup in international capital flows reinforced the recovery in most developing countries," said Hans Timmer, director of development prospects at the World Bank. "However, heavy inflows to certain big middle-income economies may carry risks and threaten medium-term recovery, especially if currency values rise suddenly or if asset bubbles emerge."
Most low-income countries saw trade gains in 2010 and overall, their GDP rose by 5.3% in 2010. This was supported by a pick-up in commodity prices, and to a lesser extent in remittances and tourism. Their prospects are projected to strengthen even more, with growth of 6.5% in both 2011 and 2012, respectively.
Current relatively high food prices, the report says, are having a mixed impact. In many economies, dollar depreciation, improved local conditions, and rising prices for goods and services means that the real price of food has not risen as much as the U.S. dollar price of internationally traded food commodities.
"However, double-digit price increases of key staples in the past few months are pressuring households in countries with an already-existing high burden of poverty and malnutrition. And, if global food prices rise further along with other key commodities, a repeat of the conditions in 2008 cannot be excluded," cautioned Andrew Burns, manager of Global Macroeconomics of the World Bank's Prospects Group.
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