- At Fitch Solutions, we continue to expect Ghanaian real GDP growth to come in below its historic trend in 2022 at 4.8%, following estimated growth of 5.0% in 2021.
- Elevated inflation will dampen consumer confidence and spending, whereas falling oil and cocoa production will weigh on exports.
- While fixed investment will accelerate as projects delayed by the pandemic.
Ghana’s growth rate will moderate this year at 4.8%, from an estimated 5% in 2021.
According to Fitch Solutions March 2022 Outlook Report on Ghana, elevated inflation will dampen consumer confidence and spending.
“Indeed, after growth of just 0.4% in 2020 – a multidecade long low, our forecast implies growth will remain below its historical five and 10-year pre-Covid averages of 5.3% and 6.8% respectively”.
The expected Gross Domestic Product (GDP) growth rate of the country is lower than the 6.2% and 5.5% forecast by the International Monetary Fund and World Bank.
The report further said though COVID-19 pandemic will continue to fade slowly, elevated inflation alongside fiscal and monetary tightening will dampen the pace of the economic recovery.
Fixed investments to surge 5% in 2022
While fixed investment will accelerate as projects delayed by the COVID-19 pandemic resume and higher commodity prices boost foreign interest in the country’s abundant natural resources, it said this will not be sufficient to offset weakness in other components.
“We forecast fixed investment will grow from an estimated 4.5% in 2021 to 5.0% in 2022, adding 1.1 percentage points to real GDP growth. This is above the pre-pandemic level of 2.7% in 2015-2019.”
Falling oil, cocoa production to weigh on exports
Again, Fitch Solutions expects falling cocoa and oil production to also weigh on exports.
Also, robust import growth will weigh on net exports, forecasting that net exports will add 0.4 percentage points to headline growth, from 0.5 percentage points in 2021.
“Imports will be buoyed by the growing construction sector as a large pipeline of delayed projects restarts and high commodity prices bolster investment into natural resource extraction, boosting capital imports”, it said.
“Export growth will be comparatively sluggish on the back of a short-term decline in two of the country’s largest commodity exports – gold (which accounts for 49.8% of exports) and oil (21.5%)”, it added.
15.4% Ghanaians vaccinated against COVID-19
As of March 3, 2022, it pointed out that 15.4% of the Ghanaian population have been fully vaccinated and 24.9% had received a dose.
This is up from 8.5% and 5.0% respectively on December 15, 2021.
“We expect vaccination rates to rise further, following regulations put in place in January 2022 mandating vaccinations for public employees and for entry into stadiums, restaurants and bars. This will allow a further loosening of social distancing restrictions which we expect will boost demand as Ghanaians return to more normal patterns of economic activity”.
Economy expanded by 3.9% in quarter 2, 2021
Ghana’s economy expanded by 3.9% in the second quarter of 2022, according to provisional figures from the Ghana Statistical Service.
This was however against a contraction of 5.7% in 2020.
According to the figures, the increase in the GDP growth rate was driven by a strong pick-up in the Services and Agriculture sectors.
The Health and Social Work (20.75%), Information and Communication Technology (20%), Hotel and Restaurants (18.7%) as well as Fishing (12.7%) Sub-sectors expanded significantly.