In a bold forecast for Ghana’s December 2024 general elections, global ratings firm Fitch Solutions has reaffirmed its earlier projection that the opposition National Democratic Congress (NDC) will emerge victorious.
This marks the third time the firm has made such a prediction, underscoring its confidence in the NDC’s chances.
However, Fitch also noted that the current New Patriotic Party (NPP) government is likely to increase public expenditure to boost its electoral prospects.
In its latest Country Report on Ghana, Fitch Solutions highlighted the government’s pre-election spending patterns, which align with historical trends of heightened expenditure during election periods.
“We expect the government to boost expenditure leading up to the December 2024 general election to enhance its chances of securing victory. However, we remain of the view that the opposition National Democratic Congress will win the election”.
Fitch Solutions
The report pointed to significant wage increases and subsidy boosts that have already been implemented. It revealed that in the second quarter of 2024, the government raised public sector wages by 31% year-on-year in nominal terms and tripled subsidies on petrol products.
These measures according to Fitch Solutions are expected to improve household purchasing power and stimulate consumer spending in the second half of 2024.
“This will boost household purchasing power and support consumer spending,” Fitch Solutions noted, reinforcing the view that these actions align with the government’s strategy to bolster its chances ahead of the election.
Economic Growth Projections and Outlook
Fitch Solutions also forecasted that private consumption will grow by 8.5% in 2024, adding 7.2 percentage points (pp) to headline economic growth.
The report noted that the growth, driven largely by government-induced increases in household spending capacity, is expected to be a major factor in keeping the economy stable as the elections approach.
However, despite the expected growth in consumer spending, Fitch Solutions warned of significant risks to Ghana’s economic outlook, with potential disruptions stemming from both domestic and global factors.
Risks to Economic Outlook
The report outlined two primary risks that could derail the current economic trajectory. Domestically, political unrest surrounding the electoral process poses a threat.
“In September 2024, the opposition National Democratic Congress staged nationwide protests alleging irregularities in the voter roll ahead of the December election,” the report stated.
Although Fitch Solutions maintained that the election will likely be conducted peacefully in line with Ghana’s recent democratic history, it cautioned that prolonged protests or large-scale violence could disrupt commercial activities, leading to lower economic growth than currently forecasted.
Such disruptions according to the report would also erode consumer and business confidence, potentially harming the overall stability of the economy.
On the global stage, Fitch Solutions noted that escalating conflict in the Middle East could have far-reaching consequences for Ghana.
The report pointed out that should this conflict drive global oil prices higher, the resulting spike in inflation would cloud Ghana’s domestic demand outlook.
It argued that given the country’s reliance on oil imports, a sharp rise in prices would place additional pressure on household incomes, undermining the purchasing power gains generated by the government’s pre-election spending measures.
This resurgence in inflation, the report predicted would further complicate economic conditions, particularly in a sensitive election year.
Fitch’s observation that the government is following historical patterns of higher election-year expenditure adds a layer of complexity to the country’s political landscape.
The government’s decision to raise public sector wages and increase subsidies could be seen as a deliberate strategy to gain voter support, but it also raises questions about the sustainability of such measures post-election.
Economic analysts have in recent times, warned that while short-term spending boosts may increase consumer confidence, they could lead to fiscal challenges in the long term.
Ghana’s debt levels and economic recovery efforts, particularly under the ongoing IMF program, are likely to face increased scrutiny if the government continues on this path of heightened spending.
Fitch’s prediction of an NDC victory, coming for the third time, indicates a growing momentum for the opposition party as the election nears.
READ ALSO: Wizkid Reignites Beef With Davido, Calls Him Talentless
