Increased oil production is set to sustain Ghana’s positive economic growth in the medium to long term, RMB Global Markets Research, the South African-based research arm of Rand Merchant Bank, has said.

“Oil production has the potential to almost double over the next four years, which makes our medium-term growth trajectory a positive one. Meanwhile, the bulk of direct investment is targeted at the oil sector,” the report said.

RMB noted that in 2016, overall investment showed a substantial recovery, and “we expect nothing less for 2017. We forecast an average growth rate of 6percent for 2017 and 2018.”

RMB’s analysis follows a release by the Ghana Statistical Service (GSS) which indicates that the country’s economy grew by 6.6 percent in the first quarter, showing an improvement from the 4.4 recorded in the same period last year.

Deputy Government Statistician in charge of operations, Anthony Amuzu, said: “There was a huge growth in the industry sector. The year on year change in oil was 59 percent compared to the first quarter of last year, and that was because of the coming on-stream of the TEN field, which was not operational in the first quarter of last year. So that contributed to the huge growth you see in the oil and gas subsector.”

Measured in terms of value, the country’s economy, including oil, is worth some GH¢$44.7billion as at the end of first quarter 2017, compared to the little above US$36.4 billion recorded in the same period last year.

The RMB research further indicated that a stable exchange rate, a reduction in inflation from the current high levels, and a narrowing of the fiscal and current account deficits have laid the foundations for sustainable economic development.

It, however, cautioned that the low cocoa and oil prices, together with the unstable supply of electricity remains a threat to government’s 6.3 percent growth target.

“The biggest and most obvious risk to solid growth is extended low oil and cocoa prices, which could reduce planned expenditure. However, power shortages remain a significant dampener on economic growth.

Although the government fast-tracked the provision of 850MW of power by 2018 and placed austerity tariffs on electricity, the sector will continue to be reliant on electricity imports due to underperforming thermal power plants. Hydropower generation will remain subdued in order to conserve water at the reservoirs,” adds the RMB report.

It noted, however, that government’s move to attract private sector participation in the power sector will improve the current power situation.

“It is encouraging, however, that the government is open to raising the level of private sector investment into the sector. This has led to the approval of a 400MW liquid petroleum gas-fired power plant. Also, the World Bank has approved a US$700million loan for the Sankofa gas fields to improve Ghana's gas supply to combat the electricity shortage,” RMB noted.