The African Development Bank (AfDB) has revised its projections for Ghana’s economic growth, forecasting a stronger performance than initially anticipated.
According to the latest estimates, Ghana’s growth rate is expected to reach 3.4% in 2024 and 4.3% in 2025. This marks an upward revision from the 2.8% predicted in February 2024, signaling a positive medium-term outlook for the country’s economy.
The AfDB, meanwhile attributed the expected growth to several key factors. On the supply side, the industry and services sectors are set to play significant roles. Private consumption and investment are anticipated to drive demand, underpinning the robust growth forecast.
This revised outlook places Ghana in a favorable position within West Africa, ranking 14th in terms of GDP growth and ahead of Nigeria.
Despite the optimistic projections, the AfDB cautions that the growth outlook is clouded by various risks. These include the ongoing impact of fiscal consolidation efforts under the Post-Covid Programme for Economic Growth, the lingering effects of Russia’s invasion of Ukraine, restricted access to finance and foreign exchange, and broader global macroeconomic shocks.
However, the bank suggests that prudent macroeconomic management policies could help mitigate these risks, stabilizing the economic environment.
Structural Transformation and Competitiveness
To sustain and accelerate economic growth, the AfDB emphasizes the need for Ghana to enhance its competitiveness. This involves addressing infrastructure bottlenecks and accelerating agro-industrialization.
The bank highlights the importance of strengthening skills development, value addition, and private sector development. Additionally, creating a conducive policy framework for technology adoption and innovation is crucial. “Ghana’s structural transformation needs reinforcement,” the AfDB stated.
“Productivity has stagnated in services, the dominant employment sector, and is rising only slowly in industry and agriculture. Agriculture’s employment share declined from 53.9% in 2007 to 29.8% in 2019, while industry’s share rose from 14.1% to 21.0% and services’ share rose from 31.9% to 49.2% over the same period.”
AfDB
The bank underscores that addressing these structural issues is vital for fast-tracking the country’s transformation and maintaining a competitive edge in the regional and global markets.
Regional Growth Outlook
The broader West African region is also poised for economic improvement. Growth is projected to pick up, increasing from an estimated 3.6% in 2023 to 4.2% in 2024, and consolidating at 4.4% in 2025.
This marks an upgrade of 0.3 percentage points for 2024 compared to earlier projections, reflecting stronger growth in major economies like Côte d’Ivoire, Ghana, Nigeria, and Senegal.
Real GDP growth in West Africa is expected to rise to 3.7% in 2024, exceeding the rate posted in 2022, and reach 4.3% by 2025 as the effects of various external shocks fade.
The projected rebound In Africa’s average growth will be led by East Africa, with a notable increase of 3.4 percentage points, and by Southern and West Africa, each rising by 0.6 percentage points.
Significantly, 40 African countries are expected to post higher growth in 2024 relative to 2023. Moreover, the number of countries with growth rates exceeding 5% will increase to 17, highlighting a broad-based recovery across the continent.
The AfDB’s revised growth projections for Ghana signal a more optimistic economic outlook for the country. With industry and services sectors leading the way, and private consumption and investment driving demand, Ghana is set to achieve notable growth rates in the coming years.
However, addressing structural challenges and mitigating potential risks will be crucial to sustaining this momentum. By enhancing competitiveness and fostering structural transformation, Ghana can solidify its position as a key player in West Africa’s economy.
The broader regional growth prospects further reinforce the potential for a robust economic recovery, benefiting not only Ghana but the entire West African region.
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