Fitch Solutions has revised its projection for Ghana’s real Gross Domestic Product (GDP) growth for 2024, increasing it from the previous estimate of 3.8% to 4.3%.
The adjustment reflects stronger than anticipated economic activities expected in the upcoming quarters. The firm also forecasts an economic expansion of 4.5% in 2025.
In its report, Fitch Solutions highlighted the basis for this optimistic revision. “We believe that economic growth over the coming quarters will remain markedly stronger compared to the last two years,” the report stated.
This growth is attributed to several factors, including an expected decline in inflation and increased government spending ahead of the December general elections.
Despite inflation remaining high at an average of 24.2% in the first quarter of 2024, Fitch Solutions expects a downward trend, predicting it will reach 19.5% by year-end. This anticipated decrease is primarily due to statistical base effects. The combination of slowing inflation and increased government spending is expected to bolster consumer activity and boost domestic demand.
Fitch Solutions also pointed to a recovery in fixed investment in 2024. Although interest rates remain elevated due to the Bank of Ghana’s significant rate hikes from 2021 to 2023, business confidence is expected to improve, leading to stronger corporate investment. The central bank had increased rates by a cumulative 1,550 basis points since mid-2021.
Supporting this positive outlook, the Ghana Statistical Service released data on June 18, 2024, showing that real economic growth accelerated to 4.7% year-on-year in the first quarter of 2024, up from 3.8% in the fourth quarter of 2023.
This marks the fastest expansion in over two years. The industrial sector saw solid growth of 6.8%, driven by increased output in mining, quarrying, and oil and gas operations.
From an expenditure perspective, economic growth was primarily driven by a significant 13.8% expansion in fixed investment and healthy growth of 11.2% in private consumption.