Ghana Private Consumption (ann. var. %)

Private Consumption in Ghana

GDP growth accelerates in Q2

GDP growth sped up to 4.8% year on year in the second quarter, from 3.4% in the first quarter.

Both the oil and non-oil sectors expanded at faster paces. Looking at a sectoral breakdown, the industrial sector grew 4.4% annually in the second quarter, contrasting the first quarter’s 0.5% decrease. Meanwhile, the agricultural sector lost steam, growing 4.6% in Q2 (Q1: +5.1% yoy). Services sector growth fell to 5.2% in Q2, marking the worst reading since Q4 2020 (Q1: +5.6% yoy). The softening was likely due to the easing of pent-up spending following the earlier removal of Covid-19 restrictions; consumer-facing activities, notably the restaurant and hotels sector, grew at a slower rate in quarter-on-quarter terms.

On a seasonally-adjusted quarter-on-quarter basis, economic growth accelerated to 1.1% in Q2, compared to the previous period’s 0.9% expansion.

Looking ahead, despite better results in Q2 than expected by analysts, growth in H2 2022 and 2023 should wane. Inflation is projected to peak in Q4 2022 and only gradually ease from Q2 2023, dampening household purchasing power. The Central Bank will continue with its tightening cycle, denting investment. The country’s current account deficit, dwindling reserves and fiscal vulnerabilities cloud the outlook.

Against this backdrop, it remains unconfirmed whether the country will receive an IMF support package. The IMF concluded a visit to the country on 7 October and called discussions with the government “constructive” but said further assessment of Ghana’s debt sustainability was required. Shortly after, the Ghanaian government stated that it had established a committee with the Bank of Ghana to lead talks with the finance sector surrounding a potential IMF program.

Analysts at Goldman Sachs commented on the country’s growth outlook:

“We expect that concerns over macroeconomic stability that prompted Ghana to approach the IMF for a funded programme and the strong monetary tightening delivered year-to-date (750bps) by the Bank of Ghana in reaction to significant inflationary pressures will weigh on growth. As such, we recently revised our 2022 growth forecast down from +3.9% to +2.5% and our 2023 forecast from +4.7% to +4.0%.”