Ghana’s economy is expected to grow strongly next year by 4.8 percent of Gross Domestic Product.

According to Fitch Solutions, this will be buoyed by rising demand for the country’s commodity exports and supportive macroeconomic conditions which will facilitate higher investment and private consumption.

“In Ghana, we expect real GDP to grow by 4.8% in 2021, buoyed by rising demand for the country’s commodity exports and supportive macroeconomic conditions which will facilitate higher investment and private consumption”, it said in its Macroeconomic Update Report”.

The 4.8 percent Gross Domestic Product growth rate will be higher than the ECOWAS sub region’s average of 4.1%.

A Senior Country Risk Analyst within the Sub-Saharan Africa (SSA) team, William Atwell, said “West African states will grow by an average of 4.1% in 2021, as markets including Côte d’Ivoire, Ghana and Senegal bounce back strongly.”

He however said the sub-region will continue to be held back by Nigeria, given continued constraints in the oil sector.

Ghana will become regional outperformer in 2020

Fitch also said Ghana will become a Sub Saharan Africa regional outperformer this year, as economic recovery is likely to gather pace for the rest of the year.

This affirms the Bank of Ghana’s recent survey that the pace of economic activity is picking up, whilst business and consumer confidence are increasing.

The global economy is expected to grow negatively this year, following the impact of covid-19.

Rationale behind a strong economy going forward

Having experienced a mild contraction in the second quarter of this year, the report said the economy is likely to gather pace – as evidenced by the recent high-frequency data for the third quarter of this year.  This will result in a Gross Domestic Product (GDP) growth of 1.3%, making Ghana an outperformer in the Sub Saharan African region.

“We expect that Ghana’s Quarter 2 2020 (Q220) contraction will be an anomaly and that the economy will return to growth in the second half of the year. Moreover, the contraction was shallow, and compares favourably with the deeper contractions witnessed in South Africa (where real GDP fell by 17.1% y-o-y in Q220) and Nigeria (6.1%)”, it explained.

Ghana’s economy contracted by 3.2% in the second quarter of this year, a situation Fitch Solutions described as a minor contraction.

It further said “both the Ghana PMI and the Central Bank’s Consumer Confidence Index returned to positive territory in August. Greater price and exchange rate stability in 2021 will further hasten the recovery”.

Q2 GDP results

Ghana’s economy contracted by -3.2% in the second quarter of this year, the first time it has contracted since 1983.

According to figures released by the Ghana Statistical Service, the heavy fall was largely attributed to some restrictions on activities in the economy, which virtually came to a standstill during the partial lockdown period, as a result of the Coronavirus outbreak.

The information and communication sub-sector recorded the highest expansion of 74.2%, while the hotel and restaurants sub-sector also recorded the highest contraction of 79.4%.