The International Monetary Fund (IMF) has said Ghana’s economy will grow at a slower rate than it had earlier predicted.
Ghana’s economy, per IMF’s latest World Economic Outlook will grow at a rate of 7.5 percent revising an earlier prediction of 8.8 percent it made in April.
The IMF’s GDP growth projection remains ambitious compared to the government target of 7.1 percent announced in the 2019 mid-year budget review.
The government’s cautious projection is hinged on the pass-through effects of the banking sector reforms which is expected to have an impact on credit to the private sector.
The latest comment about Ghana’s economy from the IMF is because, generally the global economy is growing at its slowest pace
According to the fund, world growth would hit just 3% this year – down from its July forecast of 3.2% and a sharp slowdown from just two years ago.
The IMF blamed the slowdown on trade fights, Brexit uncertainty and other geopolitical crises.
The IMF, which downgraded its forecasts for most of the world, predicted that growth in advanced economies would slow from 2.3% in 2018 to 1.7% this year.
In the US, where an economic boost from a 2017 tax cut has faded, the fund expects growth to pull back from 2.9% last year to 2.4% in 2019.
In the UK, where Brexit-related worries have hurt investment, growth is forecast at 1.2% for 2019, down from 1.4% last year.
In Germany, which is reeling from a downturn in car production, growth is predicted at 0.5%, down from 1.5% in 2018.
China’s economic growth is expected to slow from 6.6% to 6.1%. It has been hit by efforts to rein in risky debt and the trade war with the US, which led the IMF to shave almost a percentage point off global growth.
Thus far, the IMF said central banks have managed to blunt the impact of the slowdown with tools such as low-interest rates. Without those stimulus policies, it estimates that the growth rate would have been 0.5 percentage points lower this year.
“With central banks having to spend limited ammunition to offset policy mistakes, they may have little left when the economy is in a tougher spot,” the fund said.
In a related development, Economist, Dr. Lord Mensah has stated that, considering the current state of Ghana’s economy, there is likelihood Ghana will go back to the International Monetary Fund, IMF.
According to Economist, Dr Lord Mensah the country’s revenue continues to dwindle and debt continues to go up, it may be forced to subscribe to the IMF programme in the coming years.
Dr Mensah said Ghana has made a lot of investment in the bid to enhance revenue generation, but the effect is not visible.
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He noted “if we continue to realize this dwindling revenue over the years and it continues for about five years, I think we are not far from going to IMF again.”