Ghana’s investment market
Ghana’s investment market

An analyst has cautioned African commodity exporting countries to prepare for effects of a possible global economic melt-down next year.

In a conversation with Xinhua from his London base, Frank Dewortor, an analyst with Newmarket Asset Management, an investment firm with focus on frontier and African markets urged oil exporting African countries especially to hedge prices to forestall any possible future oil price dips.

“Trade wars, Brexit, monetary tightening in the USA and Europe, rising inflation in advanced countries, China growth momentum slowing are some of the factors,” he explained.

He added: “Growth will slow down substantially in 2019, but will remain robust this year; a slow-down will see the oil price retreat and the dollar rising further.”

The economist also predicted that the European Central Bank (ECB) embarking on monetary tightening next year as some of the Nordic countries are even likely raise rates in the third quarter of this year.

This projected monetary tightening by ECB Dewotor attributed to expected inflation pressures, while in China “credit growth is slowing and poses risk to GDP growth.”

“If China slows, oil and other commodities will retreat . Resource intensive economies in Africa will be the hardest hit on the continent if the expectations of a slowdown in global growth next year play out as it did between 2015 to 2017,” the economist cautioned.

The analyst observed that Nigeria for instance was just emerging from its first recession in 25 years following the Collapse in oil prices in 2014-2016, so another commodity price collapse would make such a country relapse.

He therefore urged countries such as Ghana, a gold, cocoa and oil exporter to hedge its oil export prices, since oil revenues would crash with it if we do not hedge.”

Ghana exports about 170,000 barrels of oil per day (170,000 bopd) and this has helped boost economic growth to 8.5 percent in 2017 and 6.8 percent in the first quarter of this year.

The country’s local cedi currency has however experienced a 5.5 percent depreciation during the first half of this year relative to the 3.3 percent depreciation experienced last year. Enditem

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