Ghana Economic Forecast

Year-on-year economic growth sped up in Q4 from Q3 due to a faster expansion in the services sector. Turning to Q1, GDP growth appeared to decelerate: Economic activity in January plummeted 7.6% year on year—the sharpest pace since May 2020—due to declining cement sales, port activity and private sector credit. However, PMI prints steadily improved throughout the quarter, revealing improving conditions at the tail-end of Q1. In Q2, momentum should be slowing further, but there are upside risks to that forecast. The PMI print in April reached the highest level since December 2021. Meanwhile, on 17 May, the IMF formally approved a USD 3 billion IMF loan, which should reduce economic uncertainty and improve debt sustainability. The first disbursement of USD 600 million was made available immediately, bolstering foreign reserves.

Inflation fell for a fourth consecutive month in April to a six-month low of 41.1% from 45.0% in March. The slowdown was broad-based. In 2023, inflation should continue to ease as the currency stabilizes. However, sharper-than-expected FX depreciation due to bilateral debt restructuring mismanagement, weak domestic activity and premature monetary policy easing are risks.