Ghana’s economic growth rate for this year has been revised slightly further down to 4.2% by Fitch Solutions, from the earlier forecast of 4.5%.

This is despite a 6.6% expansion in the economy in the 3^rd quarter of this year, the highest since 2019.

Prior to that, the International Monetary Fund had forecast a Gross Domestic Product (GDP) growth rate of 4.7% in 2021, whilst the World Bank had projected 3.8-4.5% GDP.

In its 1^st Quarter 2022 Ghana Country Risk Report, Fitch Solutions said “at Fitch Solutions, we continue to expect Ghanaian economic growth to come in below trend at 4.2% in 2021, largely as a result of a fairly modest recovery in household spending following the first phase of the Covid-19 pandemic in 2020. This compared to average of 5.3% over 2015-2019."

“The recovery since the slump in 2020 (when growth slowed to 0.4%, a multi-year low) has been modest, with real Gross Domestic Product (GDP) rising by 3.1% year-on-year in Quarter 1 2021 and 3.9% in Quarter 2 2021", it stressed.

The Ghana Purchasing Managers’ Index (PMI) fell below 50 in July and August 2021, indicating declining private sector activity, when restrictions were tightened amid a third wave of Covid-19 infections. Economic activity then recovered sharply in September as restrictions were eased, pointing to the economy gathering momentum in the final months of the year.

Modest consumer spending to be main cause of economic underperformance

The report said modest consumer spending will be the main cause of economic underperformance in 2021.

“We believe that growth in private consumption (71.6% of GDP in 2020) will be below trend over 2021 (3.8%, compared to 4.2% during 2015-2019), adding 2.7 percentage points to headline economic growth.

“Consumer confidence has been subdued in recent months, partly reflecting the country’s slow inoculation programme. Living costs have also remained high - inflation was 10.6% year-on-year in September - which together with a slow recovery in labour market conditions will constrain households’ disposable incomes”.

Economy expanded by 6.6% in Quarter 3, 2021; highest since 2019

Ghana’s economy expanded by 6.6% in the 3rd quarter of this year, provisional data from the Ghana Statistical Service indicated.

However, without oil, the economy grew at a rate of 8.6% in the nine months of 2021. This was a significant increase from what was recorded the same period last year, which was a contraction, as a result of the Covid-19 pandemic.

The main sub-sectors that expanded in quarter three of 2021 are Education (24.2%); Health & Social Works (20.5%); Information & Communication (17.0%); Professional Administrative & Support (16.7%); Hotel & Restaurants (16.4%); Public Administration & Defence, Social Security (16.3%), Fishing (14.3%); Real Estate (11.5%); Crops (9.8%).