Ghana’s economy grew at the fastest rate in two years in 2021, beating forecasts by the government and the International Monetary Fund after a better-than-expected fourth quarter.
Gross domestic product grew 5.4% last year after expanding a revised 0.5% in 2020, government statistician Samuel Kobina Annim told reporters Wednesday in the capital, Accra. That compares with a Finance Ministry estimate of 4.4%, the presidency’s 5.3% and an IMF projection for 4.2% growth.
GDP expanded 7% in the three months through December from a year earlier, compared with a revised 6.5% growth in the prior three months. The growth rate exceeded the 4% median estimate of six economists in a Bloomberg survey. Growth in the fourth quarter was buoyed by the agriculture and services industries.
While Ghana posted strong economic growth in the final three months of last year, it’s likely to have markedly decelerated in the first quarter, Mark Bohlund, a senior credit research analyst at REDD Intelligence, said.
Since the start of the year, the government has battled to ease investor concerns about the credibility of its fiscal targets. That’s even as policy makers increased the key interest rate by 350 basis points since November to curb lofty inflation and the government introduced spending cuts and passed a tax on electronic payments to rein in its budget deficit.
The cedi is the worst performing African currency against the dollar this year, depreciating by 18%. That and supply shocks caused by the war in Ukraine are fanning inflation, which surged to a more than 12-year high in March, and is almost double the top of the central bank’s target of 6% to 10%. Business sentiment slumped to 47.2 last month, its lowest level since May 2020, stuck below the 50 mark that implies a contraction, according to a survey of purchasing managers by S&P Global.
Those headwinds may see Africa’s largest gold producer experience a “double-dip” slowdown this year after recovering from a recession in mid-2020, Bohlund said.
“It is likely to be several years before it enjoys annual economic growth in excess of 5% again,” he said.