Ghana: Household spending to reach Ghs 104 billion in value this year
Household spending according to Fitch Solutions is anticipated to grow by 4.1 percentage points this year from the previous year’s contraction of 1.1 percent due to the Covid pandemic.
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.
“Our forecast for an improvement in consumer spending in Ghana in 2021 is in line with our Country Risk team’s forecast that the Ghanaian economy will grow by a real rate of 4.8% year-on-year over 2021, following growth of just 0.4% year-on-year over 2020. Private consumption will be the main driver of the economic recovery, and contribute 2.7 percentage points to headline growth,” said the research arm of Fitch Ratings.
“Household spending (an estimated 71.6% of Gross Domestic Product in 2020) is likely to have grown at a moderate pace in H121 [half-year 2021] as the easing of social distancing restrictions allowed both formal and informal retail activities to open up, while the gradual normalisation of business activities resulted in improving labour market conditions,” the agency added.
The agency further stated 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.
“We forecast Ghana’s unemployment rate (% of the total labour force) to average 4.1% in 2021, decreasing from 4.5% in 2020. This means that average unemployment in Ghana will return to the pre-Covid-19 level of 4.1% in 2019”, Fitch Solutions said.
“Our forecasts take into account risks that are highly likely to play out in 2021, including the easing of government support. However, there are risks to the outlook that if they do start to play out, will lead to forecast revisions,” it added.
