Will Ghana’s economy rebound stronger in 2024?

Ghana's economy is showing promising signs of recovery as analysts expect inflation to moderate further into the rest of the year. The country has seen a recent dip in inflation by 190 basis points, indicating a positive trend. Benjamin Boachie, Chief Economist at Secondstax, highlighted the progress in beating inflation and expressed optimism about the continued disinflationary trend. The International Monetary Fund (IMF) has also revised Ghana's GDP growth forecast from 2.8% to 3.1%, reflecting positive growth prospects for the country. The first quarter GDP growth came in stronger than expected at 4.7%, driven largely by the industrial sector, particularly the mining and quarrying sub-sector. Positive sentiment in the economy has encouraged larger investments from industrial and mining sectors, boosting economic growth. However, the agricultural and services sectors, which constitute a significant portion of the economy, experienced a minor slowdown in the first quarter. With regards to the currency and exchange rate issues, the outlook for the Ghanaian CD remains range-bound for the second half of the year. Global economic uncertainties, coupled with upcoming elections in both the U.S. and Ghana, are expected to keep the currency stable with minimal volatility. The recent official debt restructuring program in Ghana is expected to provide the government with more funding for critical areas and key sectors. This additional cash injection is anticipated to have positive impacts on various indicators such as job creation, particularly for the country's youth. However, the timing of these investments and their effects on the economy will largely depend on the growth model implemented by the upcoming government. Addressing the cost of living crisis in Ghana, Boachie emphasized the importance of the IMF's credit facility in supporting vulnerable populations in the economy. Social programs aimed at assisting farmers, particularly cocoa farmers, and rural communities have been vital in mitigating the impact of the strong dollar on imported inflation. Boachie highlighted the need for a weaker dollar globally to stimulate investment in emerging markets and reduce imported inflation pressures. Looking ahead, fiscal authorities in Ghana are expected to prioritize fiscal prudence and responsibility. Efforts to increase domestic revenue mobilization and broaden the tax base are crucial for reducing foreign borrowing and enhancing economic stability. Boachie noted that Ghana's tax revenue currently lags behind the continental average, highlighting the importance of robust revenue generation strategies. As Ghana approaches an election year, uncertainties loom over the economic policies and growth models to be adopted by the incoming government. Incumbent Vice President, a former World Bank economist and central banker, has outlined a growth strategy focused on digitization to empower Ghanaians economically. However, the lack of clarity on the holistic management of the economy post-election leaves room for speculation. With key contenders from different political backgrounds, including an incumbent vice president and former president, the economic direction of Ghana remains uncertain as the country navigates post-debt default recovery. In conclusion, Ghana's economy is on a path to recovery with positive growth forecasts and lower inflation rates. While challenges persist, such as currency stability and cost of living pressures, strategic investments and prudent fiscal policies are crucial for sustaining economic momentum and fostering long-term growth.