Private consumption in Ghana is estimated to grow by 3.9% in 2024 from 3.4% in 2023, Fitch Solutions has said.

This will add 3.0 percentage points to headline real Gross Domestic Product growth.

That said, fiscal consolidation will prevent growth in household spending from returning to its five-year pre-pandemic average of 5.2%. 

“The government introduced multiple revenue-enhancing measures in quarter 1 2023 – quarter 3 2023, including an increase in the Value Added Tax rate to 15.0% from 12.5% before, the institution of a personal income tax bracket of 35.0% and a 10.0% withholding tax on betting and lottery winnings. We believe that the implementation of more revenue measures is likely in the months ahead as the government attempts to meet its IMF targets”.

This it said in its latest Country Report on Ghana that it will weigh on disposable incomes in 2024, capping consumer spending growth.

“A sharp moderation in consumer price inflation - in part the result of more favourable exchange rate dynamics - will strengthen household spending. That said, growth in private consumption will be capped by fiscal consolidation”, it added. 

Fitch Solutions is also hopeful of a recovery in fixed investments in 2024 as inflation eases, business sentiment improves and the Central Bank slashes interest rates.