Ghana’s GDP growth is expected to gradually rise beyond 2024, reaching its potential rate of about 5.0%, aligning with forecasts from several international research bodies.
The International Monetary Fund (IMF), in its Country Report on Ghana, described the nation’s macroeconomic outlook as positive. Despite challenges such as ongoing fiscal consolidation and a prolonged dry spell, Ghana’s stronger-than-anticipated real GDP growth in the second quarter of 2024 has led the IMF to revise its 2024 growth projection upwards to 4.0% from the 3.1% forecast during the second Economic Credit Facility (ECF) review.
Inflation, however, is now projected to hit 18% by the end of 2024, up from the earlier estimate of 15%. This adjustment reflects pressures from a weakened cedi and the impact of the dry spell. Nevertheless, the IMF expects that sustained tight monetary policies will help reduce inflation to the Bank of Ghana’s target range of 8% ± 2% by the close of 2025.
The IMF also noted that Ghana’s progress in fiscal consolidation and the successful completion of debt restructuring would help secure public debt sustainability. The country’s current account deficit is expected to remain balanced until 2026, with international reserves projected to cover three months of imports by then.
High Downside Risks
Despite the optimistic outlook, the IMF emphasized significant downside risks. On the external front, factors such as escalating regional conflicts, the ongoing war in Ukraine, instability in the Middle East, and volatile commodity prices could negatively affect Ghana through higher imported inflation and increased financial risk.
Domestically, weak cocoa harvests could hurt exports and economic growth. Additionally, the upcoming 2024 general elections and potential political transitions could lead to policy inconsistencies, disrupt macroeconomic stability, worsen domestic financing conditions, and complicate debt restructuring efforts with external creditors.
The IMF further highlighted that inflation risks remain elevated, given the slower-than-expected pace of disinflation in the first half of 2024 and rising exchange rate volatility.
Source: TheDotNews