Apakan Securities on what the path to Ghana’s economic recovery could look like

Ghana's Electoral Commission is still in the process of collating election results across the country, with the requirement that the presidential winner must obtain more votes than all the other candidates combined. As Ghanaians eagerly await the final outcome of the election, there is a focus on what the path to economic recovery for the country should look like, especially considering the impact of the ongoing pandemic. Edem Nichola Kporku, Senior Research Analyst at Apakan Securities, shared insights on CNBC Africa regarding the current economic landscape and the outlook for the future.One of the key points discussed during the interview was the impact of the elections on the financial markets in Ghana. Kporku mentioned that despite the election year, investors have priced in the political risks fairly well, considering Ghana's strong democratic track record since 1992. He noted that investors have continued trading in financial instruments with a cautious approach, indicating a sense of confidence in the country's stability. The sentiment in the investment climate for 2020 was initially affected by concerns over the election, but Kporku highlighted that the economic environment remained stable, with inflation expectations relatively controlled. However, the emergence of COVID-19 and the subsequent lockdown measures in major cities did cause some initial panic among investors. Nevertheless, the authorities' response to manage the pandemic instilled confidence in investors, leading to significant inflows into Ghana's fixed income market. The country's currency, the Ghanaian Cedi, has faced some selling pressure due to recent US dollar demand. Kporku acknowledged the efforts of the Bank of Ghana in managing the currency by increasing intervention sizes on the spot market to mitigate the pressure during the festive season and the election period.On the economic front, Ghana experienced a contraction in GDP but is expected to see a faster-than-anticipated recovery. High-frequency data has indicated a potential growth rate between two and 2.5 percent, aligning with bottom-end forecasts. When addressing other economic challenges such as budget deficits and currency fluctuations, Kporku pointed out that the Bank of Ghana's intervention has been crucial in stabilizing the currency despite selling pressures. He also highlighted the bearish sentiment in Ghana's stock market since 2018, which saw a downturn following the increase in US interest rates that year. However, there have been recent improvements, with the market showing a boost of about 19 percent.Overall, the outlook for Ghana's economic recovery post-election remains optimistic, as the country navigates through the challenges posed by both the pandemic and the election process. The resilience of Ghana's economy, coupled with prudent measures taken by the authorities, signals a path towards sustainable growth and stability in the near future.