The projection will see a further strengthening of the local currency which is expected to end the year 2016 at GHS4.33 to the US dollar. The cedi began the year 2017 with a rate of GHS4.20 against the American greenback.
According to BMIs report, oil growth which is expected to increase by about 60 percent this year over that of 2016 will significantly boost the country’s balance of trade. Presently, crude oil is trading at US$53.27 and is expected to end the year at US$ 54.0 per barrel.
“Ghana is in the midst of a major increase in its oil and gas production at a time when energy prices are increasing. Our Oil and Gas team is expecting an uptick in oil prices by the end of the year forecasting Brent crude oil to average US$54.0/bbl in 2017, which will improve the country’s terms of trade. Combined with our forecast of a 35.0 percent increase in oil production in 2017, this will see offer tailwinds to the cedi”, the report emphasized.
Continuing, the report noted that “this informs our forecast of a significantly narrowing current account deficit and of real growth averaging a robust 6.0 percent year-on-year between 2018 and 2026 – almost double the 2016 growth rate”, the report stated.
According to the report, the boom in the oil industry will also lower the dependence on commodities such as cocoa, which have suffered from structurally lower prices and given Ghana relatively poor terms of trade in recent years.
Earlier in the year, BMI forecasted that Ghana’s growing exports and relatively weak import growth is expected to see the current account deficit continue to fall from 2.3 percent of GDP to 1.0 percent by 2019. However, recent development in the oil industry has forced the research outfit to review its forecast.
The report said “Oil exports will increase sharply over the coming years after the TEN oilfield came online in August 2016, which we forecast will contribute to production growth of 15.2 percent year-on-year in 2017 and 26.6 percent growth in 2018. In addition to increasing production, export revenues will receive a further boost from higher oil prices”.
The report further stated that Ghana’s gold exports, which is 39.1 percent of all goods exports in 2015 will also receive a boost in 2017, as prices are expected to increase from US$1,248.0 per ounce in 2016 to US$1,300.0 per ounce in 2017, and USD1,400 per ounce in 2018 on the back of increasing global uncertainty.
Finally, the recovery in cocoa prices, expected to begin in 2018, will offer another tailwind to the country’s export revenues, having accounted for 25.4 percent of total goods exports in 2015, it added.
Also, inflows of Foreign Direct Investments will likely see some decline from 2016 levels but will nonetheless remain robust in order to sustain a number of ongoing infrastructure projects to 2019.