There are still considerable risks that could potentially derail Ghana’s economic recovery process, US-based economist, Dr. Dennis Nsafoah, has revealed.

These risks include volatile global economic conditions, potential fluctuations in commodity prices, delays in restructuring external debt, and domestic challenges such as political instability, particularly with the upcoming elections or delays in implementing structural reforms under the Economic Credit Facility programme.

“Thus, while there is a basis for optimism, vigilance, and adaptive policy responses will be crucial in navigating the uncertainties that lie ahead for the Ghanaian economy in 2024 and beyond”, he mentioned in a statement dubbed “Clarity in the chaos”.

Despite the hurdles, Dr. Nsafoah who is with Niagara University, said there is a cautious optimism regarding the near-term prospects of the Ghanaian economy.

“While a full recovery to its long-term potential is not anticipated immediately, it is expected that the key macroeconomic indicators will stabilise and, in some areas, show significant improvement from the troughs experienced in 2022 and 2023. This optimistic outlook is grounded in a few pivotal factors”, he explained.

“First, a favorable shift in global monetary conditions is expected to alleviate some external pressures. Secondly, domestic fiscal consolidation efforts are projected to stabilise and strengthen the economy's foundation. Lastly, the support from the International Monetary Fund (IMF) through the Extended Credit Facility (ECF) programme is anticipated to provide a structured path for economic recovery and stability”, he added.

His analysis projected a real Gross Domestic Product of 2.8% in 2024, end-year inflation of 17.0%, a cedi depreciation of 14%, and a policy rate of 25% in 2024.

“Output [GDP] is expected to pick up from 2023 and further increase to 4.4% in 2025. The disinflationary trend that began in 2023 is expected to persist, with the inflation rate decreasing to 17% in 2024 and a further decrease to 10% in 2025, aligning with the Bank of Ghana's target. This downward trend in inflation is likely to prompt the Bank of Ghana to cut its policy rate by 500 basis points in 2024, reaching 17% by the end of 2025”, he mentioned.

He concluded that a debt payment moratorium agreed with official creditors, lasting until May 2026, is expected to significantly aid in rebuilding Ghana's international reserves, which are projected to cover 1.7 and 2.4 months of imports in 2024 and 2025, respectively