Ghana Economic Outlook
The economy likely cooled in the second quarter. In Q2, exports fell by more than in Q1 and private credit growth experienced a sharp deceleration. Additionally, April’s high inflation and fiscal consolidation capped domestic demand. That said, the average private-sector PMI for Q2 surpassed that of Q1. In Q3, the economy is set to remain downbeat, with the PMI remaining roughly stable in July-August compared to Q2. High inflation should be continuing to limit household demand, and the external sector is likely still underperforming. Furthermore, private credit growth may have slowed further amid high interest rates. In other news, the government reached 95% of its end-September target by exchanging USD 4 billion of domestic debt with creditors in late August. This increases its likelihood of securing the next tranche of IMF funding—worth USD 600 million—in the coming months.
Inflation fell to 40.1% in August (July: 43.1%), surprising markets on the downside. The reduction of price pressures was broad-based. Inflation should ease later this year from current levels thanks to an increasingly challenging base of comparison. However, sharper-than-expected FX depreciation and premature monetary policy easing are upside risks.