Fitch Solutions has revealed that Ghana’s economy has begun a recovery after two difficult years.

In its April 2024 Sub-Saharan Africa Macroeconomic Update, the UK-based firm said the country’s economy will expand by 3.5% in 2024, contrary to the World Bank’s 2.9%.

Senior Country Risk Analyst at Fitch Solutions, Mike Kruiniger, said the signs are clear that the Ghanaian economy has begun recovery.

According to him, the primary driver of economic growth will be consumer spending, spurred by moderating inflation.

“Very difficult two years I think for the Ghanaian economy in 2023, having come in at a pretty muted 2.9% [Gross Domestic Product growth rate]. That said, I think there are some signs that Ghana’s economy has finally started a recovery with growth in the last quarter of 2023, having rebounded, coming in at 3.8%”

“And the growth was primarily driven by an improvement in the agriculture sector, as well as stronger activity in the services industry”, he explained.

“So turning to 2024, we forecast that the economy will expand by 3.5 %, but still below the country’s pre-pandemic [Covid-19] trajectory, but remarkably better compared to last year”, he added.

Elections to Stimulate Spending

He continued that the election year will stimulate government spending, as the government will try to improve the general well-being of the people, adding, "and considering the track record of the Ghanaian governments spending around election years, I think we can reasonably anticipate a similar ramp up ahead of the December [2024] polls".

Interest Rates to Go Down

The Bank of Ghana cut its policy rate by 100 basis points in January 2024 but kept it unchanged in March 2024.

Mr. Kruiniger said, “Now that the Bank of Ghana has kicked off a monetary easing cycle in January, we expect that the Central Bank will lower interest rates to transmit through the economy.”.

He pointed however out that credit uptake will remain weak and “that businesses will keep their expansion plans on the sidelines for just a little bit longer”.