An investment bank IC Securities’ research division, IC Research, has maintained its forecast for Ghana’s Gross Domestic Product (GDP) growth for 2023 in the range of 1.9% to 2.9%.

According to IC Research, the agriculture sector will grow as a result of continued momentum in the livestock and crops sub-sector, while ICT, transport & storage, and education will continue to support the growth of the services sector.

“We expect aggressive fiscal consolidation in the second-half of 2023 to weigh on the public sector drivers of growth while the price sensitive trades, hospitality and industry sector remain constrained by cost pressures in 2023.”
IC Research

Meanwhile, Ghana’s real GDP expanded overall in the first quarter of 2023 at a rate of 4.2% compared to the 2.6% consensus forecast, exceeding expectations.

Stronger-than-Expected Expansions in Sectors

In order to propel growth above expectations, stronger-than-expected expansions in the services (10.1%) and agriculture (4.8%) sectors more than offset contractions in the price-sensitive industry sector (-3.2%).

The first quarter of 2023 saw the services sector grow by an impressive 10.1% year over year, driven by massive growth rates in public administration & defence (37.6%), health & social work (31.6%), and education (26.0%).

ICT (18.9%), finance & insurance (8.6%), transport & storage (6.4%), and real estate services (5.1%) all experienced greater private sector-led growth.

IC Research added that the services sector outperformed expectations but is likely to falter in the quarters ahead.

Meanwhile, the price-sensitive Hospitality (-0.2% y/y) and Trade (-5.3% y/y) sub-sectors contracted in as a result of foreign exchange squeeze, removal of the benchmark discount policy at the ports, and utility tariff hikes since August 2022.

“Overall, we remain bullish on growth in ICT and Transport & Storage in 2023 due to the ongoing digitalization within the public and private sectors as well as emerging private transport and logistics businesses.

“However, we are bearish on public sector-led sub-sectors and cautious on finance & insurance activities as financial institutions prioritize post debt exchange recapitalisation in place of profit growth.”
IC Research

In addition to the FX pressures, it said “we expect the quarterly hikes in utility tariffs and the recent increase in excise duty to elevate the operating cost of manufacturing businesses”.

“Despite the higher cost of operation, we believe distributors of consumer goods will be unable to fully pass on the cost implication of higher taxes and utility tariffs due to weak demand conditions.”

Consequently, it foresee a contraction In profit margins, leading to weaker growth momentum for the manufacturing sector with negative spill over to the trade sector.