Predictions for the Economy in 2017

Last year, I invited four young analysts to join me predict the economy in 2016. The post was well-received and in my opinion, we did not do too bad with the predictions. This year, I reached out again to some of the analysts who I have been following keenly to share their expectations for 2017. I am grateful that they took the time to send me their submissions. Just like last year, I’ll also add my predictions.

Hafiz Mussah

Hafiz Mussah holds Masters degrees in Business Management and Finance, and is occasionally smart.

Widespread forecasts put GDP growth at around 7% , a very encouraging level the country hasn’t seen since 2003-8. Consistent power supply, the continued growth of the agricultural sector, oil price gains and the expansion in gas and oil operations from new fields are sure to offset low commodity prices and high domestic debt financing costs. If the incoming government expedites promised efforts to tackle high inflation and reduce taxes, that would be a welcome boost to the private sector. Cutting fiscal deficit as well as stabilization of the falling Ghana cedi would lead to loosening of monetary policy. The outlook is positive and encouraging.

Abena Y. Awuku

Abena is a writer and a final year student of International Business & Management Studies in the Netherlands.

I am not expecting much to change as the economy has really been mismanaged. So for the first year I expect the government to robustly start laying the foundation for the economy and then take off for the second year. Perhaps a dip in inflation may happen and boost in consumer confidence but that should be all about it.

Roland B-Johnson

Roland B-Johnson is a research student supported by SOAS with interests in trade and development issues.

My approach towards 2017 is a mix of cautious optimism and “wait and see”. On the macro-side, the economy is projected to grow by almost 8% accounted for mainly by oil production. There may be a revenue boost if global oil prices do indeed rise following planned supply cuts by OPEC. Several indicators also suggest that the economy has bottomed out (stability in exchange rate and gradual fall in inflation). It remains to be seen however the approach the new government will take towards current fiscal consolidation efforts vis-à-vis campaign promises. We do not have any indication on how far they are willing to depart from the current IMF programme. There have been promises to restore allowances that have been suspended and reverse several taxes. High expectations from Ghanaians can also drive high spending in efforts to fulfill some campaign promises. This may be too much too quickly for a recovering economy. What many analysts are watching out for will be the government’s plan to meet our high interest payment liabilities. This is perhaps the biggest drain on the budget and has serious consequences for all sectors.  Other threats include the precarious situation in the energy sector, higher wage demands and further fall in prices of our main exports.

Andrews Akoto

Andrews Akoto is a Fixed Income & Currencies Trader at Barclays Ghana

I expect 2017 to see healthy growth on the back of the new oil fields, and an upbeat global oil price outlook following the OPEC agreement. Tight funding conditions and energy challenges stifled growth to a 21-year low in 2015, with 2016 not being much of a turnaround story. However, I think we can be more optimistic about the coming year. Further policy easing and downward trending interest rates are expected as inflation declines. We should see more pronounced base effects, provided that food inflation is contained and the cedi reprises its largely stable performance. The decisive single-round elections and smooth transition underway is also market positive. I do not envisage major policy shifts immediately. While the incoming administration is perceived to be pro-business with market-friendly policies, the commitment to the IMF programme is unlikely to change.

Terry Budu Abban

Terry is the Finance Manager of Abmaad Company Limited. He writes about economics on economistaterry.com and technology on terryabban.com.

The repeal and reduction of some taxes as promised by the NPP (WHT, Financial Services, Real Estates etc) will see an increase in GDP (as elaborated by Les Picker, 2008) by the end of the fiscal year. There wouldn’t be significant leakages (taxes, imports, savings) compared to this year. The promise of a more efficient tax system, if implemented early next year, will decrease the over reliance on debts. Cocoa production will increase compared to 2016 figures. The Cedi will perform well and CPI will be closer to single digit. I do not expect subsidies on fuel to be replaced, but that happening would not be dumbfounding.

Jerome Kuseh

Jerome is a digital media executive with Business & Financial Times and an ICAG-qualified accountant.

2016 ends with successful elections, 30-month low inflation, falling cost of government borrowing and the GSE down 17%. With inflation trending downwards, the BOG will cut the policy rate. The government will not fully roll out its promised tax cuts and public sector benefits as the deficit for 2016 could be more than 7% and also due to financial commitments required to ensure steady energy supply. Curbed enthusiasm for Trump’s policies will rein in the strong dollar, bringing relief to the cedi. Gold and cocoa may struggle, making tax and increased oil revenue from TEN & other fields more important. I also expect a better GSE performance due to new listings.

Happy New Year!

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Jerome Kuseh

Financial Analyst | Accountant | Private Investor
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