Business sentiment will remain fragile in the coming months, whilst private consumption is expected to decelerate this year, largely due to the expected implementation of the 1.5% Electronic Transfer Levy (E-levy), Fitch Solutions has disclosed in its latest Sub Saharan Africa update.

According to the research arm of ratings agency, Fitch, Ghana’s Purchasing Manager’s Index – which determines the direction of economic trends in the manufacturing and service sectors - declined for the first time in seven months due to the rising prices of some goods and services.

Analyst with the Sub-Saharan Africa Country Risk Team at Fitch Solutions, Ben Weaver, said the high prices of goods are impacting on consumption and the private sector.

“We are already experiencing the impact of high prices on the private sector, amid elevated prices of input and concerns of over supply chains”.

“We expect business sentiments to remain fragile in the coming quarters. Moreover, we expect the introduction of the 1.5% E-Levy tax to create further headwinds on domestic demands with a direct effect on mobile money, which is actively used by 40% of Ghanaians age 15 and older”.

“Against this background, we expect private consumption growth to decelerate in 2022”, Mr. Weaver sad.

Despite this, foreign investments are expected to rise including new investments in gold production by GoldFields and AngloGold Ashanti.

“Rising foreign investment will also prevent a sharp slowdown in the economy. We further expect strong growth in fixed investments at 5% in 2022 which was above the 5 year pre-pandemic average of 2.7%”, Mr. Weaver noted.

“While fixed investment will accelerate as projects delayed by the COVID-19 pan­­demic resume and higher commodity prices boost foreign interest in the country’s abundant natural resources, it said this will not be sufficient to offset weakness in other components”, he concluded.