Fitch Solutions has maintained its 2.9% Gross Domestic Product (GDP) growth rate for Ghana in 2023 despite the International Monetary Fund and the World Bank all forecasting below 2.0% expansion of the economy.

According to the research and market information firm, the expected growth rate will remain below the five-year pre-pandemic average of 5.3%.

In its latest report in Ghana dubbed “Ghanaian economy will underperform in 2023 and 2024”, Fitch Solutions said fiscal austerity efforts will put a damper on private consumption through 2023, clouding economic growth prospects.

It furthered that the new taxes introduced as part of the International Monetary Fund programme will exert downward pressure on purchasing power and thereby weakening the outlook for private consumption.

“These new tax measures will exert downward pressure on purchasing power and thereby weakening the outlook for private consumption”.

In addition, a rise in taxes will slow the pace of disinflation over the coming quarters.

It stressed that while a more stable exchange rate and moderating global commodity prices will see price growth moderate over the coming quarters, inflation will remain sticky to the upside as tax increases will result in further upward adjustments to consumer prices.

“While a more stable exchange rate and moderating global commodity prices will see price growth moderate over the coming quarters, inflation will remain sticky to the upside as tax increases will result in further upward adjustments to consumer prices”, it added.

GDP growth rate to accelerate to 3.7% in 2024

Meanwhile, Fitch Solutions is forecasting a real Gross Domestic Product growth to accelerate to 3.7% in 2024.

However, it will remain below the five-year pre-pandemic average of 5.3 percent. 

Economy expanded by 3.1% in 2023

Real GDP growth came in at 3.7% year-on-year in the 4^th quarter of 2022, well-above consensus expectations, driven by robust growth in the mining and ICT sectors (which expanded by 13.4% and 20.5% respectively).

However, economic growth was capped by poor performances in the manufacturing and real estate sectors (which declined by 9.6% and 13.4% respectively) on the back of high inflation and more contractionary monetary policy.

Full-year growth slowed to 3.1% in 2022, well below Ghana’s five-year pre-pandemic average of 5.3%.