GCB Capital forecasts subdued economic activity for 2023 despite strong first quarter growth
Despite an impressive 4.2% real Gross Domestic Product (GDP) growth in the first quarter of 2023, economic activity in Ghana is expected to remain subdued throughout the year, warns GCB Capital.
The Bank of Ghana has reported a contraction in the Composite Index of economic activity over the past seven months, primarily driven by slowdowns in leading indicators such as port activity, cement sales, private sector credit, and imports. The uncertain macroeconomic climate is also reflected in mixed results from consumer and business confidence surveys.
GCB Capital highlights tightening credit conditions and a deceleration in industrial activity as key factors contributing to the likely slowdown in growth and employment creation within the real sector.
Ghana’s economy surpassed analysts’ forecasts with a robust 4.2% expansion in the first quarter of 2023, as disclosed by the Ghana Statistical Service (GSS). This growth rate significantly outpaced the 3.1% recorded during the same period in 2022.
The GSS attributes the strong growth to sectors such as Public Administration, Defense & Social Security, Health & Social Work, Education, and Information & Communication, which played pivotal roles in driving the growth rate. Notably, the Services sector registered the highest growth rate at 10.1%, followed by Agriculture with a growth rate of 4.8%. However, the Industry sector contracted by 3.2%.
In contrast, seven sub-sectors experienced contractions in the first quarter of 2023, including Water Supply, Sewerage, Waste Management & Remediation Activities, Construction, Wholesale and retail trade, repair of motor vehicles and motorcycles, Fishing, Mining and quarrying, Manufacturing, and Hotels and Restaurants. These declines in certain segments may further contribute to the overall subdued economic outlook.
