Ghana’s GDP growth rate to moderate 4.8% in 2022
Rating agency, Fitch Solutions, has indicated that Ghana’s growth rate will slow to 4.8% this year from an estimated 5% in 2021.
According to Fitch Solutions” March 2022 Outlook Report on Ghana, 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.
“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,” it stated.
Furthermore, the report stated that though COVID-19 pandemic will continue to fade slowly, elevated inflation alongside fiscal and monetary tightening will dampen the pace of economic recovery.
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,” noted the agency.
Additionally, the report expects a fall in the production of cocoa and oil which will weigh on exports.
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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.
Fitch Solution disclosed that as of March 3, 2022, 15.4% of the Ghanaian population have been fully vaccinated and 24.9% had received a dose, which 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”.
Ghana’s economy expanded by 3.9% in the second quarter of 2022, according to provisional figures from the Ghana Statistical Service, which however, was 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.
