IMF projects Ghana’s economy to grow 7.5% in 2019

The International Monetary Fund (IMF) recently projected that Ghana's economy is set to grow by 7.5% in 2019, but this growth is expected to drop to 5.6% in 2020. These projections come amidst a backdrop of global economic challenges and uncertainties, with the IMF highlighting the impact of the US-China trade war as a major factor affecting emerging and developing economies. To delve deeper into the implications of these projections for Ghana, CNBC Africa spoke with John Gatsi, Dean of the School of Business at the University of Cape Coast. Gatsi provided valuable insights into the key takeaways from the IMF's projections and the specific risks and opportunities facing Ghana's economy. Gatsi acknowledged that the decline in economic growth projections for 2020 was not surprising, citing recent events such as the collapse of several banks in Ghana, which had a significant impact on the country's ability to lend money to the real sector of the economy. This, in turn, has hampered productive activity for entrepreneurs in Ghana and is likely to have a lingering effect into the next year. The IMF also highlighted the risks faced by resource-dependent economies like Ghana, emphasizing the need for structural reforms to drive sustainable growth. Gatsi agreed with this assessment, noting that Ghana has historically struggled to add value to its commodities, such as gold and oil, which has limited the economic benefits derived from these resources. He warned that Ghana's reliance on resource revenue for consumption rather than investment posed a significant risk to the economy's future stability. Moreover, Gatsi pointed out the importance of attracting foreign direct investment (FDI) to key sectors like agriculture and manufacturing to achieve inclusive growth and development. He highlighted the need for Ghana to enhance incentive packages to attract FDI that would drive the country's economic transformation. In the context of the African Continental Free Trade Area (AfCFTA), Gatsi emphasized the potential for Ghana to leverage this market of 1.2 billion people to boost its economy. He noted that while the government is optimistic about the opportunities presented by the AfCFTA, analysts have cautioned that Ghana must take proactive steps to capitalize on the potential benefits. Gatsi urged Ghana to diversify its export destinations within Africa and prepare for increased trade volumes under the AfCFTA. However, he expressed concerns about Ghana's rising debt portfolio and the implications this could have on the country's fiscal position. In conclusion, the IMF's projections for Ghana reflect both the challenges and opportunities facing the country's economy. As Ghana navigates a complex global economic landscape, it must prioritize structural reforms, attract strategic FDI, and harness the potential of the AfCFTA to drive sustainable growth and development.