Research firm, IC Securities is warning that improving macroeconomic conditions will be clouded by election-related uncertainty.

In it Ghana Macroeconomic Outlook Report 2024, it said the ongoing 3-year International Monetary Fund-supported reforms programme will anchor the policy environment and sustain the steadily improving macroeconomic conditions in 2024.

“The front-loaded nature of fiscal adjustment in 2023 provides room to soften the pace of adjustment in 2024, slightly easing the constraint to growth in the year ahead. However, election years have generally been the achilles heel of fiscal sustainability in Ghana. In view of this, we are mindful of the potential macroeconomic effects and safe-haven positioning as Ghana’s 2024 general elections approach”, it pointed out.

It however stated that election-induced spending will revive growth modestly but the general private sector pulse will remain weak.

“With our expectation that real Gross Domestic Product (GDP) growth will bottom-out in 2023 at 2.4%, a less aggressive fiscal squeeze in 2024 on account of election induced spending will provide a catalyst for a modest rebound in growth.”

“After the frontloaded adjustment in 2023, we expect fiscal policy to pivot in the direction of softer correction in the fiscal imbalance in 2024 without compromising the IMF’s performance criteria. In the 2024 budget, the Ghanaian authorities signalled a target fiscal adjustment of 1.0% of GDP, a softer pace compared to the 3.8% adjustment implemented in 2023. Subject to improved revenue outturn, this gives room for the authorities to execute the strong CAPEX [Capital Expenditure] plan of GHS 28.7bn (+54.3% year-on-year)”, it added.

Furthermore, it said the upscaling of public investment will stimulate a rebound in the construction sector, which contracted for four straight quarters as of half-year 2023.

“We also perceive the benefit of a favourable base effect to growth in the construction sector following the successive quarters of shrinkage. However, a disappointing fiscal revenue performance will restrain the public investment drive and cap the anticipated recovery”, it continued.

IC Research also expects the manufacturing sector to benefit from moderating producer and consumer price pressures, partly reviving idle capacity in 2024 after four consecutive quarters of contraction as of half-year 2023.

It added that the industry sector will receive a further boost from new oil wells under the ongoing Jubilee South East (JSE) project to push oil output from the Jubilee field above 100,000 barrels per day.