Fitch Solutions has revised its growth rate forecast for Ghana in 2023 downwards by 1.7 percentage points to 2.9 percent, down from an earlier forecast of 4.6 percent.
The modest growth projection for the West African state by the UK-based research and market institution, is the lowest since pre-Covid-19 pandemic in 2015.
According to Fitch Solutions, subdued consumer spending will be the major cause to the slowdown in the economy in 2023. Senior Risk Analyst at Fitch Solutions, Mike Kruninger, said the projection is based on Ghana’s quest to secure a programme from the International Monetary Fund.
Fitch Solutions warned that inflation will remain elevated in the coming year though there are possibilities of a gradual decline in average prices.
“One of the main reasons why economic activity will slow down next year  is the weak outlook of consumer spending, which typically is the engine of Ghana’s economy.
“What we expect is inflation to come down, starting early next year. This will be gradual, meaning for the large part of 2023, inflation will remain very elevated, further eroding the purchasing power of households and this weighing on private consumption.”Mike Kruninger
Mike Kruninger explained that the expected high inflation is backed by the Bank of Ghana’s consumer and business confidence indicators which show that private sector sentiment is indeed severely subdued.
In October 2022, Fitch Solutions projected a 4.6% growth rate for Ghana in 2023 which was by then, higher than the 2.8% forecast by the International Monetary Fund.
However, Fitch Solutions noted in its Quarterly Sub Saharan Africa Macroeconomic Update that the economic growth forecast is premised on an expected deal with the International Monetary Fund before the end of 2022. Luckily, the IMF staff has agreed a $3 billion deal with the country to address its macro-economic challenges but this is subject to approval.
Government of Ghana’s growth expectations
The recent projections by Fitch Solutions is marginally higher than the expectations of the Government of the Ghana which now expects the economy to expand by 2.8% in 2023.
Finance Minister, Ken Ofori-Atta, announced the growth forecast as part of government’s macroeconomic targets for next year. Non-oil real Gross Domestic Product growth rate is also projected at 3% in 2023.
Mr. Ofori-Atta assured that government is taking active steps to address the impact of the economic shocks on Ghanaians through the seven-point agenda to restore macro-economic stability and accelerate the economic transformation as articulated in the Post-COVID-19 Programme for Economic Growth.
Ghana’s economy expanded by 4.8% in the second quarter of this year, higher than the 3.4% recorded in the first quarter, data from the Ghana Statistical Services revealed.
The appreciable growth rate was driven by Manufacturing (8.8%), Crops and Cocoa (4.5%), Mining and Quarrying (4.4%), Information and Communication (12.4%) as well as the Education (13.2%) sub-sectors.
For the sectors, the Services sector (5.2%) expanded more than the national average. It was followed by Agriculture (4.6%) and Services (4.4%).
High average prices, which stemmed from currency volatilities and high ex-pump petroleum prices set in motion an inflationary spiral which now see inflation at a 27-year high of 50.3% as of the end of November, 2022.
The Bank of Ghana now expects inflation to peak in the first quarter of 2023, before declining to its target band. The high inflation is expected to weigh heavily on the overall growth of the Ghanaian economy in 2022.