The Institute of Statistical, Social and Economic Research (ISSER) has warned that poverty levels in Ghana may worsen if economic growth remains sluggish.

The economic growth is projected to slow down in 2025 despite a rebound in 2024, largely due to reduced capital expenditure, tight fiscal policies, and delays in implementing new economic initiatives.

Addressing stakeholders on Ghana’s economic outlook, ISSER Director, Professor Peter Quartey noted that the country recorded GDP growth of 5.7% in 2024, driven mainly by ICT, construction, and mining However, growth is forecast to slow to 4% in 2025—below the Sub-Saharan Africa average of 4.2%.

He attributed the downward projection to lower capital investment, pegged at 2.5% of GDP, and the slow take-off of the much-touted 24-hour economy policy.

“The 24-hour economy is a medium-to long-term measure and will take time to yield results,” he cautioned.

The fiscal outlook also presents significant challenges. Ghana missed its 2024 revenue and deficit targets, recording a fiscal deficit of 7.9% against a revised target of 4.2%. Revenue underperformed, reaching 15.9% of GDP instead of the expected 17.4%, while expenditure overshot projections.

Professor Quartey expressed concerns about debt sustainability, though the debt-to-GDP ratio has declined to 61.8% due to restructuring efforts.

“We’re inching towards the IMF’s recommended 55%, but complacency could plunge us back into crisis,” he warned.

He cautioned that the government’s reliance on domestic borrowing to fund the deficit could crowd out private sector access to credit, raise interest rates, and stifle growth.

“We risk repeating past mistakes if we’re not careful with borrowing and debt repayment,” he added.

“Already, businesses complain of lack of access to credit and low demand due to reduced household incomes. The crowding out effect from government borrowing could worsen the situation,” he noted.

On revenue mobilisation, Professor Quartey described as overly ambitious the government’s target of increasing income and property tax revenue by 45.4% in 2025.

“This is very ambitious. What new measures are in place to achieve this?” he queried.

While welcoming plans to leverage digital systems for tax compliance, he stressed the need for research-backed policies and mid-year reviews.

“If we fail to monitor, we’ll face shortfalls and rush back to introduce new taxes mid-year,” he cautioned.

Professor Quartey further criticised the poor accessibility of tax refunds, arguing that it discourages compliance.

“If businesses don’t believe they’ll get their money back, tax compliance will fall,” he said.

The broader economic outlook also raised concerns. “Key sectors that drive jobs and incomes, including agriculture and industry, are showing signs of weakness,” he said. Agriculture, a major employer, grew by just 2.8% in 2024 and is projected at 3.1% this year. Industrial growth is also expected to dip significantly from 7.1% to 3.8%, while the services sector faces a similar decline.

For households, this slowdown could mean fewer job opportunities and increased cost of living pressures, especially as the government embarks on an aggressive domestic revenue drive.

“The proposed 45.4% increase in income and property tax revenue could stretch household budgets further if not properly managed,” he cautioned.

Calling for discipline, Professor Quartey urged strict enforcement of fiscal responsibility laws and regular progress reviews to prevent mid-year budgetary shocks.
“We must stop recycling policies that lack data-driven foundations. Only then can we restore macroeconomic stability,” he advised.