Oil output to drive 7% GDP growth this year ahead of slight slowdown
Although under much better control than in the past, inflation has risen slightly since mid-2011. It has been driven by high world oil prices and cuts in fuel subsidies. In February 2013, inflation was close to 10%. High spending ahead of December 2012 elections lifted the budget deficit to about 7% of GDP last year. Together with surging imports and the depreciating currency, this may prevent any further decline in inflation. The Bank of Ghana raised interest rates by 250p in H1 2012 and has kept them unchanged since then.
The current account deficit climbed to almost US$5b in 2012 as the trade deficit widened. But despite continued high import growth, we expect the deficit to fall this year as oil revenues build, with further declines seen in the next few years.
With the onset of oil production boosting activity, GDP growth rose to over 14% in 2011. The year-on-year rate peaked at over 20%. The pace has slowed since mid-2011 as the big boost to activity from oil dropped out of the calculations. But growth was still over 7% in 2012, and may be revised up as oil output surpassed expectations in Q4. As the increase in oil production slows, we forecast GDP growth of 6.9% in 2013 and then about 5% annually in 2014-16.
Inflation
Source: Oxford Economics.
Real GDP growth
Source: Oxford Economics.
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