Ghana: GDP growth hits over five-year high in Q3
GDP growth steps harder on gas: GDP growth accelerated further in the third quarter to 7.2% year on year, improving from the upwardly revised 7.0% increase seen in the second quarter. The upturn again smashed market expectations.
On a seasonally adjusted quarter-on-quarter basis, economic growth accelerated modestly to 1.7% in Q3, following the previous period’s 1.6% increase. Both upturns were the best results since Q2 2019.
The engines of growth: Exports, investment and the industrial sector: The annual acceleration was due to improvements in exports, investment and public spending. Looking at the domestic sector, public consumption growth sped up to 3.4% in Q3 (Q2: +2.1% yoy). Moreover, total investment growth accelerated to 23.8% in Q3, following the 9.3% expansion in the previous quarter. Less positively, household spending growth waned to 3.0% in Q3 (Q2: +5.6% yoy), marking the weakest result since Q4 2022.
Turning to the external sector, the contribution of net exports turned more negative compared to the prior quarter. On the one hand, exports of goods and services increased 14.7% on an annual basis in the third quarter, which was above the second quarter’s 12.6% expansion. However, imports of goods and services growth picked up to 11.8% in Q3 (Q2: +8.7% yoy), marking the strongest reading since Q4 2023.
Looking at sectoral data, the acceleration reflected faster growth in the services and—particularly—in the industrial sectors.
Economy turns a corner: The Ghanaian economy appears to be on its way out of the woods. The recently concluded debt restructuring deals, the implementation of reforms, and the inflows of IMF funds seem to be bearing fruit. Looking ahead, spillovers from these developments, coupled with the trickling down to the real economy of interest rate cuts, will strengthen economic fundamentals: Our Consensus is for GDP growth to accelerate from 2023 through 2028. The performance of the cocoa sector—which employs around 40% of the labor force—is a two-sided risk.