Ghana’s current account deficit to widen to 4.1% of GDP – Standard Bank

Ghana’s current account (C/A) deficit is expected to widen to 4.1% of Gross Domestic Product in 2022.

According to Standard Bank Africa Market Revealed, financing a wider current account deficit in 2022 would prove near impossible due to the lack of external funding.

”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 government earlier ruled out seeking another International Monetary Fund- programme, but had to make a U-turn.

This is because the steep increase in Ghana’s Eurobond yields effectively shuts the door to any such commercial financing.

Meanwhile, the report said cocoa exports too may soften this year due to fertilizer price hikes – but gold exports should recover from a low base.

“But even gold exports face downward pressure, with the US dollar index now broadly stronger which could dampen international gold prices. Imports could increase owing to more expensive input prices such as those of fertilizer”, it added.

However, as the MPC continues to potentially tighten its policy stance further, it stressed that consumer import demand could ease.

Growth rate cut to 3.1%

Standard Bank also cut Ghana’s gowth rate forecast for 2022 to 3.1%, from the earlier 6.2%.

It 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.