Ghana’s Economic Growth Slows to 3.2% in Q2 Amid Fiscal Tightening and Inflation

Ghana’s Economic Growth Slows to 3.2% in Q2 Amid Fiscal Tightening and Inflation

Ghana’s economy experienced its slowest growth rate in almost a year in the second quarter due to fiscal tightening and high inflation, BNN Breaking has learned.

The gross domestic product (GDP) saw an increase of 3.2% in the three months through June from a year earlier. This was a slight dip from the 3.3% expansion in the previous quarter and was slightly lower than the 3.3% median expansion that economists had predicted. As a result, the Ghanaian cedi declined 0.1% to 11.4988 per dollar and the yield on Ghana’s dollar bonds maturing in 2032 rose 3 basis points to 23%.

Sectoral Performance: Services, Industry, and Agriculture

In the same quarter, growth in the services sector amounted to 6.3% from a year earlier, which was similar to the growth in the previous three months. However, the industry sector contracted for a third consecutive quarter to 1.9%.

The agriculture sector also saw a slowdown in growth to 6% from a revised 6.4% in the three months through March. The introduction of new taxes and hikes in utility prices, which increased the cost of production, were the main reasons for this slowed growth. Inflation also played a role, averaging more than 40% in the quarter, compared with 27% in the same period last year.

Fiscal Policy and Debt Restructuring

The government’s efforts to cut spending and reduce its debt load might keep the output muted. Ghana, the largest gold producer in Africa, is tightening its fiscal policy and restructuring its debt, which was valued at $50 billion at the end of April. This restructuring is part of the terms of a $3 billion International Monetary Fund program.

Upcoming IMF Review and Growth Forecasts

The West African nation will undergo its first review under the IMF program later this month. The Finance Ministry of Ghana nearly halved its forecast for growth this year to 1.5% due to a slowdown in major sectors of the economy. However, the country expects growth to rebound to 2.8% next year, 4.7% in 2025, and 4.9% in 2026.