Fixed investment in Ghana will grow by a subdued 1.3% in 2023, below the 2015-2019 average of 2.7%, adding 0.3 percentage points to the headline growth.

According to Fitch Solutions, this is due to tighter financial conditions that will weaken activity in the real estate and construction sectors further, placing downside pressure on fixed investment growth over the year.

“Fixed investment will remain subdued due to constrained access to credit amid tighter monetary conditions and the domestic debt restructuring programme. Public investment spending will also remain weak as the government reins in spending”.

Since late 2021, the Bank of Ghana (BoG) has raised the policy rate by a total of 1,500 basis points to 29.50%, becoming one of the most hawkish central banks globally.

The UK-based firm said this will restrict private-sector access to credit, likely delaying corporate investment plans and weighing on fixed capital formation over the year.

“Furthermore, banks will face significant pressure on their balance sheets due to Ghana’s domestic debt restructuring programme, weakening their ability to issue loans to corporates as well as the government”.

Government consumption to decline

It also believed that government consumption will decline on fiscal austerity efforts as part of Ghana's $3.0 billion International Monetary Fund programme.

Private consumption take a nose dive

Again, Fitch Solutions said fiscal austerity efforts and still-elevated inflation will erode consumers' purchasing power and weigh on private consumption over the year.

In addition, middle- and high-income households will forgo some of their investment income following the domestic debt swap.