Ghana: GDP growth accelerates in Q1
Surprising markets on the upside, GDP growth accelerated to 4.2% year on year in Q1, from 3.2% in the fourth quarter of last year. Q1’s reading marked the best result since Q4 2021.
The industrial sector contracted 3.2% annually in the first quarter, compared with the fourth quarter’s 1.0% decrease and marking the largest contraction since Q2 2021; contractions in the mining, oil and gas, manufacturing and construction subsectors all dragged on industrial output. Meanwhile, the agricultural sector gathered steam, growing 4.8% in Q1 (Q4: +3.6% yoy). Services sector growth improved to 10.1% in Q1, from the 7.6% expansion recorded in the previous quarter. Within services, subsectors linked to public spending drove the upturn.
On a seasonally-adjusted quarter-on-quarter basis, economic growth edged up to 1.1% in Q1, from the previous period’s 0.8% expansion. In sequential terms, Q1’s reading was also the best since Q4 2021.
Economic growth is expected to have slowed in the second quarter from Q1. Household consumption was likely dragged down by elevated inflation and a restrictive monetary policy stance. Furthermore, consumer demand was also weighed down by tax increases implemented in April, while government spending was likely constrained by the frontloaded fiscal consolidation measures implemented under the IMF’s USD 3 Billion Extended Credit Facility Arrangement. That said, the IMF program should have boosted investor confidence, boding well for investment