Economic Analysis - BMI Vs. Consensus: Above Consensus on Ghanaian Growth - FEB 2018

This month in BMI vs Consensus, we examine our above consensus forecast for the Ghanaian economy and below for the Kenyan exchange rate. We also discuss our political outlook on South Africa, which is within consensus.

Above Consensus Ghanaian Growth: We are above consensus on Ghana's real GDP growth in 2018, with a forecast of 7.5% against a Bloomberg consensus of 6.5%. Our positive view is largely due to our expectation of a 60.0% increase in oil production in 2018, building on an already impressive forecasted 35.0% increase in 2017. Output will be boosted by the end of a moratorium on production in a key part of Ghana's offshore oilfields, following the resolution of a maritime border dispute with Cote d'Ivoire in autumn 2017. That said, we highlight that there is a significant divergence between headline growth and non-oil sector growth in Ghana - a gap as wide as 5.0% in Q217 - which will remain, as other sectors of the economy grow much more sluggishly.

Below Consensus on Kenyan Shilling : We remain bearish on the Kenyan shilling compared to consensus, expecting an average of KES107.0/USD in 2018 as opposed to consensus of KES106.20/USD. We believe that post-election political tensions will remain into early 2018, which will weigh on external investment into Kenya. Alongside weak investor sentiment, monetary easing in H218 will see declining real rates, keeping Kenya's currency remain on a modest depreciatory trajectory. Monetary tightening in the United States and other developed markets will add further depreciatory pressure to the shilling and most emerging market currencies.

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