Accra, Nov. 15, GNA - Although growth prospects in the world were bright for 2008, there still remained some downside risks, the Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu said on Thursday.
These include a deepening in the crisis of the housing sector in the US, upward trend in crude oil prices, retrenchment from risky assets should financial markets volatility rise and inflationary pressures which could heighten as output gaps close.
Presenting the 2008 Budget statement in Parliament, he warned that in the long run, any developments that could undermine the current buoyant productivity performance could be a downside risk that could impair global growth.
These may include technological progress, open global trading system, cross country capital flows as well as resilient macroeconomic policy framework and financial systems.
Mr Baah-Wiredu said in the medium term, average growth in the West Africa Monetary Zone (WAMZ) region was expected to be strong and broadly stable, although it would have to do more to grow sufficiently to achieve the targets of the MDGs.
The Minister said inflation pressures from the escalating crude oil prices were expected to be a challenge to the economies, and this would require continued prudent fiscal and monetary policies to control inflation expectations to meet the single digit target. On international commodity prices Cocoa prices on the London International Future and Funds Exchange (LIFFE) assumed an increasing trend from A3886 in January, peaking at A31,121.00 in July 2007. However, it had assumed a declining path towards the third and fourth quarter of the year, he said.
Mr Baah-Wiredu said the high commodity price for cocoa had been driven mainly by low crop yields in West Africa and Indonesia in the 2006/2007 main crop season.
"Favourable rainfall has improved prospects of cocoa production in the largest producing countries la Cote d'Ivoire and Ghana for the 2007/2008 main crop which opened in October, 2007. La Cote d'Ivoire's output is estimated at about 1.3 million tonnes compared to about 1.28 million tonnes for the last cocoa season while Ghana's output is projected at 650,000 tonnes as against 614,000 tonnes in the 2006/07 crop season.
On gold, Mr Baah-Wiredu said prices had increased steadily from US$ 650 in the first quarter of the year to US$ 680 per ounce in the third quarter of 2007.
The general weakening of the US dollar has contributed to the increasing commodity prices, most notably gold, whose price of was projected to hit $850/oz by end 2007, as investors will continue to increase their holdings in gold and other commodities. Mr Baah-Wiredu noted that crude oil prices had far exceeded their projected levels since August 2006, with analysts warning that intense pressures from US reserves and refineries were likely to worsen the situation. 15 Nov. 07
