Consumer spending to fully recover from Covid in 2021; to expand by 4.7% in 2022
Fitch Solutions has said it expects consumer spending in the country to recover fully from the effects of the Covid pandemic by the end of 2021.
The expectation by the research agency follows its projection of a 4.1 percentage points growth in real household spending (consumer spending) for 2021 following an estimated contraction of 1.1 percent in household spending in 2020 due to the Covid-19 pandemic and the impact of the related restrictions on the country’s economy.
According to Fitch Solutions, it further expects consumer spending growth to remain positive, expanding by 4.7 percent in 2022.
On the back of the expected growth, household spending in Ghana is estimated to be valued at some Ghs 104 billion.
The forecast, which indicates improvement in consumer spending this year, Fitch Solutions notes, is in line with the expected 4.8 percent real growth rate of the economy.
“We forecast total household spending (in real terms) of GHS104.9bn (USD73.4bn) in 2021, this is higher than the pre-Covid-19 levels of GHS101.9bn (USD71.2bn) in 2019 and indicates that household spending will fully recover in 2021,” said Fitch Solutions.
Adding that, a successful vaccine rollout will aid the recovery of consumer spending growth in Ghana, as it will reduce the risk of further strict lockdown measures.
The Bank of Ghana (BoG) in measuring its Consumer Index of Economic Activity (CIEA) for July noted consumer sentiments improved, reflecting optimism about current and future economic conditions.
Improved consumer sentiments translate into improved consumer spending.
Household Spending Growth To Recover In 2021
Ghana – Total Household Spending, real % y-o-y (2015-2025)
e/f = Fitch Solutions estimate/forecast. Source: National sources, Fitch Solutions
On the global scene, Fitch Solutions asserts that its global view for a notable recovery in consumer spending relies on the ability of authorities to vaccinate enough proportion of their populations and thereby experience a notable drop in Covid-19 infections and a decline in hospitalisation rates.
“Both of these factors will lead to governments gradually lifting restrictions, which will boost consumer confidence and retail sales,” it added.
Global Risks To Outlook 2021
Downside Risks
Source: Fitch Solutions
