The April 2023 Africa Pulse Report has revealed that Ghana’s economy is projected to face headwinds, as the World Bank lowers the country’s growth rate to 2.0%, placing it at the 29th position in Sub-Saharan Africa.

This, as stated by the report, is a significant downgrade from the 2.7% growth rate forecasted earlier for the country.

According to the Bretton Wood institution, the expected low growth rate in the country is due to deleterious global shocks and heightened macroeconomic instability.

In line with the World Bank’s April Report, Ghana’s economy has been struggling with high levels of public debt and elevated inflation, fueled by a sharp weakening of the cedi. This has led to a decline in government consumption due to high debt service and restricted access to international capital markets.

Business and consumer confidence slumped in late 2022, but the Purchasing Managers Index, as disclosed by the report, is gradually picking up, signaling an expansion in economic activity with a score of 50.2 in February 2023.

“Growth in Ghana is expected to have slowed in 2022 to 3.2%, down from 5.4% in 2021 and far below the country’s average pre-pandemic performance (6.1% percent in February 2023), fueled by a sharp weakening of the cedi (a cumulative depreciation of 40 percent in 2022, and about 20 percent in 2023 so far).”
World Bank Report

To curb the rising inflation, the report disclosed that the Bank of Ghana raised its policy rate by a record 1,500 basis points to 29.5% in March 2023, from 14.5% in December 2021.

According to World Bank, the recovery of economic activity in Sub-Saharan Africa is multispeed, with wide variation across countries.

“The region’s moderate growth in 2022 was associated with large countries on the continent registering growth rates that were lower than their long-term average.”
World Bank Report

Broadly, the report stipulates that more than half of the countries in the region are growing at rates below their long-term average.

Sudan, Nigeria, Angola, and Ethiopia are among the countries with weaker performance compared to their long-term growth rates. However, Congo DR is expected to become the fastest-growing country in Sub-Saharan Africa in 2023.

Economy To Grow At 2.8% In 2023

Despite the challenging economic conditions, it can recalled that Ghana’s Finance Minister, Ken Ofori-Atta, during the presentation of the 2023 Budget in November, stated that the economy will expand by 2.8% in 2023.

The services sector, according to the finance minister, will “remain the dominant sector over the medium term in percentage contribution to overall national output, followed by industry and agriculture.”

He further noted that the economy is expected to rebound from 2024 and grow steadily in the medium term to record an average growth of 4.8 percent over the period between 2024 and 2026.

Thus, Ghana’s Finance Minister remains optimistic about the country’s economic prospects and expects a rebound from 2024 with steady growth in the medium term.