Ghana's GDP May Be Revised Up by 50%

Ghana may revise up the size of its economy by 50 percent, after underestimating growth for years, Standard Bank Plc said today.

“The implications are clearly huge,” Stephen Bailey- Smith, head of Africa research, said in an e-mailed report. “Many of the risk measures that we calculate will have a significantly lower denominator,” including fiscal and current account deficits.

While reducing the relative size of the budget deficit, the revision may also cut the impact of oil production, which will begin later this year and was expected to push economic growth to 22 percent in 2011, Bailey-Smith said.

The revision would give a greater weighting to more dynamic sectors of the economy, he said.

“It is our understanding that the Ghanaian authorities (confirmed by the IMF) believe that they have been underestimating GDP and thus GDP growth for many years,” Bailey-Smith said.

No-one was immediately available at the Finance Ministry to comment.

The Bank of Ghana will probably cut its prime lending rate, currently at 18 percent, by 2 percentage points next month, Standard Bank forecast. The domestic currency, the cedi, will strengthen to 1.35 to the dollar by the end of this year, Bailey-Smith said.

The currency was trading at 1.4305 as of 11:09 a.m. local time. To contact the reporter on this story: Emily Bowers in Accra at ebowers1@bloomberg.net Last Updated: January 28, 2010 08:28 EST