Databank Research is warning that weak consumption and a high unemployment rate pose a greater threat to economic recovery amid ongoing fiscal consolidation efforts.

As a result, it believes a softer credit conditions could help revive businesses and facilitate the resolution of legacy debt through refinancing mechanisms.

“We concur that Ghana’s labour market remains soft, and the creation of jobs may take time to materialise. We expect hiring conditions to stabilise gradually as growth strengthens, but persistent structural constraints suggest a slow recovery in employment momentum”.

The Bank of Ghana cut its policy rate by 250 basis points to 15.5% in January 2025. This is despite an elevated Non-Performing Loan ratio (excluding provisional losses) at 20-23% in the banking sector.

Databank Research said in its economic outlook for 2026 that Ghana’s labour market remains soft, and the creation of jobs may take time to materialise.

Inflation to decline to 5.09% in 2025

Meanwhile, it is forecasting that headline inflation rate will decline to 5.09% by the end of 2026, outperforming the central bank’s 8% ± 200bps target band.

It explained that the outlook is supported by expected improvement in food supply and a relatively stable exchange rate environment.

“We expect bumper food harvests and smoother supply chain dynamics to keep month-on month CPI [Consumer Price Index] volatility below 6%. Previous contractionary measures by the central bank appear to have absorbed much of the excess liquidity carried over from 2024, diluting the likely effect of demand-pull inflationary pressures. As softer fiscal actions take hold, we expect cost-push pressures to remain fairly contained”, it added.

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