What to expect in 2019

Businesses and households alike have entered 2019 with considerable uncertainty as to their economic and financial prospects for the year and also as to what events have been slated which will impact on their fortunes.

Consequently, GOLDSTREET BUSINESS presents an extensive special feature which provides a preview of 2019, to serve as a guide to what to expect with regards to both economic and financial trends that will unfold and specific events that will take place.

Of course, being that we are not Nostradamus, we are by no means certain that the expectations set out hereunder will all pan out precisely. However, our predictions of impending trends have been compiled using the technical expertise and predictive skills of both local and international research economists and financial analysts and so should serve as informative, and largely reliable guidance for our readers as they begin their activities for 2019.

 Nevertheless we warn that sudden, unexpected shocks, if they occur, could change things significantly. For instance, the outbreak of war in the middle east would send global oil prices skyward and substantially change Ghana’s economic outlook. Therefore we put a caveat on our trend predictions – they are based on what economists describe as ceteris paribus, which in plain language means, all other things being equal. 

Our calendar of upcoming events, although nowhere near all-inclusive – most of the events that will impact business have not even been planned yet – is however far more definitive than our trend predictions and so can be used to commence building a most useful calendar of impending events in 2019.

All this makes our special section on “What to Expect in 2019” crucial reading.


  • Interest rates will stop falling
  • Cedi depreciation will occur but minimally
  • Inflation will fall further
  • Banks will increase lending to the formal sector but the informal sector will experience a “credit crunch”



Ghana’s economic outlook for 2019

This year, expansionary economic policy will make a cautious return to Ghana’s economy after four years of demand management under the expiring Extended Credit Facility programme devised by the International Monetary Fund. However while this will mean increased public spending and consequent increased liquidity, the suspension of monetary easing by the Bank of Ghana will constrain the pace of expansion. Toma Imirhe looks ahead at the likely outcomes and the implications for enterprises and households.

Four years of strict demand management under the auspices of the International Monetary Fund will begin being replaced this year by the advent of supply-side driven economics. While the IMF sought to cut cumulative demand in Ghana’s economy down to the size of its supply capacity, the President Nana Akufo Addo administration, true to its word and now let off the Fund’s leash, will seek to increase that supply capacity to match those cumulative demand levels, albeit without using more cloth than the economy’s size allows for. That is what happened between late 2012 and the commencement of the IMF programme in April 2015 and hopefully, crucial lessons have been learnt.

The new strategy being applied by government is illustrated by the fact that although the fiscal deficit target for 2019, of 4.2 percent of the rebased Gross Domestic Product, is lower than the outcomes for most of the past six years, it is nevertheless higher than the rebased target of 3.9 percent for 2018.

Even more importantly though, 2019 will mark the return of significant capital expenditure on infrastructure, after two years during which spending on ambitious social interventions, coupled with sharp reductions in fiscal deficit spending largely crowded out expenditure on development projects. The economic infrastructural development budget for 2019 is GHc4,632 million, up sharply from GHc1,804 million in 2018. This is being made possible primarily by the commencement of the implementation of a deal government has made with Sinohydro Corporation of China under which that company will provide some US$2 billion worth of economic infrastructure in exchange for an equivalent value of refined bauxite.

This, along with continuation of the clearance of payment arrears to government’s contractors, can be expected to provide a substantial liquidity boost for an economy whose growth prospects have been curtailed by debilitating illiquidity as government tries to balance its books, even as about a quarter of its tax revenues has to be exported to service its foreign debt.

Indeed, the ultimate aim of the new strategy is to accelerate economic growth which, after spurting up to some 8 percent in 2017, has fallen back to an estimated 5.7 percent last year, largely because consumer spending constraints have curbed expansion in domestic economic output. This year, government is targeting a resurgence in economic growth to 7.6 percent on the back of increased economic activity made possible by increased public spending.

This means that many business enterprises, institutions and households can look forward to more available spending money than over the previous two years. However this does not necessarily mean they will want to spend it – interest rates, which have been falling since the Bank of Ghana began its monetary easing in late 2016, have started rising again following the central bank’s prudent decision to try and keep them competitive against interest rates offered on dollar denominated instruments, which themselves have been rising over the past year as the United States own central bank ends its own monetary easing begun at the turn of the decade.

This means higher interest yields offered on benchmark short term government treasury bills, which indeed have risen to 14.40 percent and 15.04 percent for 91 day and 182 day treasury bills respectively, up from 13.3 per cent and 13.8 percent as at the beginning of last year. Since fixed term depositors tend to insist on a premium above short term treasury rates for their placements, this means enterprises and households with significant excess cash will have a good year if they save rather than spend.

Importantly, depositors will stand to earn higher interest rates even as inflation continues to fall. Despite a marginal 0.1 percent rise in consumer price inflation to 9.4 percent in December, which is line with a customary spike in consumer prices during the end of year festivities, inflation is expected to fall further this year. Trading Economics, a leading international economic research firm which uses sophisticated econometric modelling to forecast macroeconomic outcomes across both advanced and emerging market economies around the world, forecasts that consumer price inflation in Ghana will fall to 8.7 percent by the end of the first quarter of 2019, to 8.5 percent by the second quarter, and further to 8.3 percent by the third quarter and 7.9 percent by the end of the year. Instructively, this more or less corresponds with the BoG’s own forecasts that inflation will fall to around the mid-point of its own medium term target of 8 percent plus or minus 2 percent during the first half of this year.

For this to happen though, the cedi will need to hold its own against the dollar, after struggling in 2018. However, the BoG’s decision to suspend monetary easing should help in this regard. Besides this Ghana can be expected to sustain the trade surpluses it has been enjoying regularly for each quarter since the last quarter of 2016.

While the World Bank, in its World Economic Outlook released in October last year predicts a fall in gold prices, to US$1,302 per ounce in 2019, due to the strengthened dollar, the International Monetary Fund forecasts oil prices rising to US$74 a barrel this year, up from US$72 as at the end of 2018. Importantly it forecasts an average price for this year of US$69 a barrel, the same as for 2018 but significantly higher than the US$53 a barrel in 2017. Importantly, this would be US$2 a barrel higher than the US$67 a barrel benchmark price used for the 2019 budget and if achieved would give government extra, direly needed revenue.

Cocoa prices are also expected to rise to US$2,350 per ton in 2019, up from US$2,200 in 2018 and US$2,025 in 2017, on the back of supply constraints affecting both Ghana and Cote d’Ivoire due to adverse weather and land degradation.

All this holds the potential for the cedi’s relative stability in 2019, backed by considerable foreign loan inflows, from a proposed US$3 billion Eurobond issue and US$1.5 billion to be received by the Ghana Education Trust Fund for new infrastructure, borrowed against expected receipts due it from VAT payments.

Trading Economics, forecasts an exchange rate of GHc4.95 to a dollar for the first quarter of 2019,  GHc5.01 for the second quarter, GHc5.07 for the third quarter and GHc5.13 for the last quarter. This would mean a better performance by the cedi than in 2018.

While borrowers may have to pay higher interest rates on the loans they take than in 2018, those in the formal sector can expect easier access to them as the restructuring and strengthening of universal bank balance sheets has been concluded. “We expect credit supply to the private sector to continue growing  (this) year albeit at a cautious pace as banks continue to adopt stringent credit risk management procedures aimed at improving credit performance”, says Vish Ashiagbor, managing partner of Price Waterhouse Coopers and the official receiver, appointed by government, for several of the banks that have had their licenses revoked in recent times. Bank credit to the private sector increased by 13 percent over the 12 months up to September 2018, to reach GHc41.127 billion outstanding on their books.

Ken Ofori-Atta, Finance Minister

However informal sector and small sized formal sector borrowers can expect a tough year as the BoG turns its attention to restructuring the balance sheets of the microfinance institutions, savings and loans companies and rural banks which provide most of the credit they get. Enforcement of new minimum capital requirements, bad loan provisions and new corporate governance and risk management directives will constrain their lending considerably in 2019 in similar fashion to what happened to the universal banks themselves in 2018.

Finally, equity investors, can look forward to a potentially rewarding year too. Equity analysts at both Databank and Strategic African Securities predict that the Ghana Stock Exchange’s composite index may rise by as much as 30 percent this year. It this indeed happens it would be good compensation for the dismal fortunes equity investors suffered in the latter stages of 2018 from a stockmarket which deteriorated from the best performing in the world early in the year to one that was posting across-board price falls by the end of the year.

Moodys forecasts increased profitability – and consequently improved dividends and share price appreciation – from the recapitalized banks in 2019 that are listed on the GSE, a sentiment shared by Alex Boahen, head of Databank Research who expects that rebounding economic growth this year can be taken advantage of by the banks to expand their respective loan portfolios profitably.

Eli Keledorme, an equity analyst at SAS, another leading investment banking and stockbroking firm, expects share price growth for consumer-oriented stocks such as Guinness Ghana Breweries, Fan Milk and Unilever.

As with any other year, 2019 will see both winners and losers. Which category an enterprise or household falls into will depend largely on how astute they are, how quickly and prudently they can react to market signals, but perhaps most importantly, how clearly they can see ahead and thus act proactively.