Fitch Solutions is warning that a sharp decline in global gold prices triggered by a return towards more conventional trade policies in the US and/or the resolution of major global geopolitical flashpoints would quickly erode Ghana's international reserves.

According to the UK-based firm, the central bank would in this scenario struggle to maintain the cedi at current levels, leading to a renewed sell-off.

“This would keep inflation elevated, lead to a weakening in consumer and investor sentiment and prompt the central bank to keep interest rates higher for longer”, it added.

This was captured as part of its downside risk forecast.

On the upside risk, it said a further appreciation of the cedi would bring inflation down more quickly than “we currently project”.

This would support stronger private consumption and prompt the Bank of Ghana to ease monetary policy more rapidly, which would stimulate credit uptake. 

Government Consumption

It pointed out that the contribution of government consumption will be negative in 2025.

This is because the government pursues fiscal consolidation in line with Ghana's International Monetary Fund programme.

Private Consumption

The report said a stronger exchange rate amid elevated gold prices will support the disinflation process, ease pressure on household budgets, and support consumer spending in the quarters ahead.