The World Bank is warning that prolonged Middle East tensions could hurt Ghana’s economy. 

According to the Bretton Woods institution, though Ghana’s status as an oil producer and major gold exporter may help cushion the economy, the prolonged global trade disruptions from the Middle East conflict could weigh on macro-financial stability”.

These concerns were captured in the World Bank’s 10th Ghana Economic Update Report.

The report is on the team “Reset for Growth: Sustaining Macroeconomic Recovery and Unlocking Transport for Transformation”

Despite these concerns, the World Bank is projecting that Ghana will end  2025 with a growth rate of  4.8%, adding that  “medium-term outlook is broadly positive, though growth is expected to moderate”.

However, on the medium term, the growth is expected to converge toward its estimated potential of around 5%.

Inflation is also expected to remain within the Bank of Ghana’s  8 ± 2% target band, whilst the current account is projected to remain in surplus in 2026, and the primary surplus target of 1.5% of Gross Domestic Product is achievable provided revenue reforms are implemented as planned.

The World Bank, however, warned that “These projections are achievable—but they are not guaranteed, and the downside risks to this outlook are material”.

They represent the defining features of Ghana's medium-term vulnerability.

Risks Tilted to Downside

The Bank went ahead in the report to state that risks to macroeconomic stability are tilted to the downside.

It also stated that “externally, gold price volatility, geoeconomic fragmentation, and the Middle East conflict—which elevates energy, food, and agricultural input costs—are the primary concerns potentially weighing on potential growth, eroding fiscal revenues, and driving inflationary and exchange rate depreciation pressures.”

The World Bank was worried that the policy slippages in the energy and cocoa sectors, along with fiscal pressures from extending temporary relief measures such as fuel price interventions, could erode recent macroeconomic gains and jeopardize debt sustainability objectives.

It again stated that increasing debt service payments in 2027–2028 continue to pose rollover risks given the reliance on short-term debt instruments.

However, it maintained that “The reopening of the domestic bond market that started in April 2026 is expected to relax these financing pressures with longer-maturity instruments”.

Policy Recommendations

The World Bank is therefore proposing some policy recommendations to deal or manage the expected risks going forward.

First, on revenue-led fiscal consolidation, the Bank believes that the domestic revenue mobilization agenda is a central pillar for fiscal sustainability.

The Bank added the primary surplus has been achieved largely through underspending rather than broad-based revenue growth.

Therefore, the reform priority is to broaden the base, improve compliance, and build a tax administration system capable of capturing revenues from all segments of the economy on a fair and equitable basis.

Second, regarding expenditure quality, the Bank pointed out that it is very important that policy actions were introduced in 2025 to bring fiscal consolidation back on track. They were amendments to the Public Financial Management (PFM) and Public Procurement Acts aimed at strengthening commitment controls and preventing future slippages.

However,  the World Bank warned that repeated compression of capital investment, infrastructure maintenance, and social transfers risks eroding the medium-term foundations of the recovery.

“Priority , must therefore must be  placed on safeguarding high-return public investment, preserving priority social spending, and strengthening PFM to improve efficiency—recognizing that fiscal discipline and growth-supportive expenditure are complementary, not competing, objectives”.

Key priorities, the World Bank stated that should include developing a more robust fiscal risk architecture covering systematic disclosure of contingent liabilities, integrating risk scenarios into budget planning, and strengthening SOE accountability mechanisms.