Fitch reviews downwards Ghana’s GDP growth rate for 2021
Fitch Solutions, the research arm of credit rating agency, Fitch Ratings, has reviewed downwards Ghana’s Gross Domestic Product (GDP) growth rate for 2021.
In its Q1 2022 Country Risk Report on Ghana, Fitch Solutions projects an end-year GDP growth rate of 4.2% representing a 0.3 percentage points reduction in the earlier projected GDP growth rate of 4.5% for 2021.
The downward review of the country’s GDP growth is despite the 6.6% expansion of the Ghanaian economy in the third quarter of the year.
“At Fitch Solutions, we continue to expect Ghanaian economic growth to come in below trend at 4.2% in 2021, largely as a result of a fairly modest recovery in household spending following the first phase of the Covid-19 pandemic in 2020. This compared to average of 5.3% over 2015-2019,” said Fitch Solutions.
“The recovery since the slump in 2020 (when growth slowed to 0.4%, a multi-year low) has been modest, with real Gross Domestic Product (GDP) rising by 3.1% year-on-year in Quarter 1 2021 and 3.9% in Quarter 2 2021″, it added.
The International Monetary Fund (IMF) along with the World Bank have forecasted GDP growth rates of 4.7% and 3.8-4.5% for this year.
The Government of Ghana (GoG) at the begining of this year however, projected a GDP growth rate of 5% supported by the first phase of the implementation of the GHS 100 billion Ghana CARES Obaatanpa Programme.
According to the report, modest consumer spending is the main cause of economic underperformance for 2021.
“We believe that growth in private consumption (71.6% of GDP in 2020) will be below trend over 2021 (3.8%, compared to 4.2% during 2015-2019), adding 2.7 percentage points to headline economic growth.
“Consumer confidence has been subdued in recent months, partly reflecting the country’s slow inoculation programme. Living costs have also remained high – inflation was 10.6% year-on-year in September – which together with a slow recovery in labour market conditions will constrain households’ disposable incomes,” the report noted.
Economy expanded by 6.6% in Quarter 3, 2021
Ghana’s economy expanded by 6.6% in the 3rd quarter of this year, provisional data from the Ghana Statistical Service indicated.
However, without oil, the economy grew at a rate of 8.6% in the nine months of 2021. This was a significant increase from what was recorded the same period last year, which was a contraction, as a result of the Covid-19 pandemic.
The main sub-sectors that expanded in quarter three of 2021 are Education (24.2%); Health & Social Works (20.5%); Information & Communication (17.0%); Professional Administrative & Support (16.7%); Hotel & Restaurants (16.4%); Public Administration & Defence, Social Security (16.3%), Fishing (14.3%); Real Estate (11.5%); Crops (9.8%).
