The report based on preliminary data, from research companies that monitor emerging markets growth figures suggest a slowing down in growth prospects of countries, which are highly dependent on commodity exports.
Emerging market economic growth has slipped to its slowest pace since the 2009 slump, as developing nations struggle with the impact of a stronger US dollar and weaker commodity prices new figures suggests.
Dr. John Gatsi, a senior economist and senior lecturer at the University of Cape Coast School of Business in an interview with Times Business said the report painted an accurate picture of the current global economic conditions and its effect on emerging and developing countries.
He said most developing countries such as Ghana depended on the export of primary commodities such as oil, gold and cocoa adding that a fall in the prices of these commodities on the international market would have adverse effects on the economies of developing countries.
“The difficulties that Ghana is going through now are not peculiar to her alone, almost all emerging countries are suffering from the global economic condition,” he said.
Dr. Gatsi said the price volatility for commodities affects Ghana’s foreign exchange, revenue and would ultimately throw the country’s projections out of gear.
Ghana is expected to record a shortfall of GH¢2.7 billion for 2015 as far as revenue mobilisation from Ghana’s oil sector is concerned, Finance Minister Seth Tekper told Parliament on the implications of the plummeting price of crude oil on the world market .
Ghana earlier estimated to rake in GH¢4.2 billion from the sector this year.
In essence, just GH¢1.5 billion is estimated to be raised by the country from the oil sector due to the sharp fall in the price of crude oil on the world market.
The initial estimates as captured in the 2015 budget and fiscal statement read to Parliament in November 2014 were calculated at a projected crude oil price of 99 dollars per barrel.
Also, the Minister said as a result of the changes in figures, the estimated fiscal deficit of 6.5 per cent will increase to 7.5 per cent for 2015.
Dr. Gatsi however, stated that Ghana’s prospects were still bright over the medium term but only if it quickly restores fiscal stability.
He said the deal with the International Monetary Fund (IMF) would help the country to address some of the challenges confronting the economy especially in the area of stabilising the local currency against its international peers.
The IMF last week agreed to a $918 million aid programme that also aims to help increase tax collection and strengthen central bank policy.
Dr. Gatsi however, stressed the need for the country to control its expenditure and rather invest in other sectors of the economy.
Capital Economics, which monitors preliminary data from 46 emerging markets, expects average EM economic growth in the first three months of the year to decline to 4 per cent year on year, down from 4.5 per cent in the fourth quarter of last year — the lowest level since 3.9 per cent in the final quarter of 2009.
Referring to separate estimates of average growth in gross domestic product, Felix Huefner, chief economist at the Institute of International Finance, said the year-on-year expansion rate for EMs would be 3.4 per cent in the first quarter, down from 3.8 per cent in the final quarter of last year and 4.6 per cent in the first quarter of 2014.
The financial crisis was an external shock that EMs were able to recover from pretty quickly. This slowdown is longer in the making, and is driven largely by internal factors- Neil Shearing, Capital Economics
Meanwhile, Chris Williamson, chief economist at Markit Economics, said: “EM GDP growth will slip below 5 per cent in the first quarter, which would be the weakest pace of expansion since the third quarter of 2009, according to our analysis of official data.”
Some of the largest EM countries appear to be showing the most emphatic slowdowns, according to Jasper McMahon of Now-Casting Economics, a London-based company that also crunches preliminary data.
Brazil’s economic growth rate, for instance, appears to have slumped to a negative 1.24 per cent in the first quarter, down from a negative 0.3 per cent in the fourth quarter of last year, he said. China’s expansion rate may decline to 6.82 per cent, from 7.3 per cent in the fourth quarter. Mexico, a relative EM bright spot, could see a slide from 2.6 per cent in the fourth quarter to 2 per cent in the first.
Business Desk Report