Net exports will be the main driver of Ghana’s economy in 2023, international research and market information firm, Fitch Solutions has revealed.
According to the firm, production increases in the country’s most prominent commodities – gold, oil, and cocoa – will bolster export growth.
“Indeed, our Mining team projects that growth in gold output will remain healthy following the recommissioning of the Bibiani mine, as well as efforts to formalise artisanal and small-scale gold mining, while our Agribusiness team forecasts robust growth in cocoa production as favourable weather conditions in quarter 4, 2022 are likely to result in a strong harvest”.
At the same time, it said subdued private sector activity amid still-high inflation and rising taxes will lower import demand, and thus improve Ghana’s trade balance.
Taking these various dynamics into account, it is projected that net exports will add 2.1 percentage points to headline economic growth in 2023, up from 1.7% in 2022.
However, the economy it said will grow at a rate of 2.9% in 2023, higher than the government estimate of 2.8%
Fixed investments to slow down
It also said fixed investment growth will slow on weaker access to credit for businesses.
In 2022, the Bank of Ghana (BoG) hiked the policy rate by a total of 1,250 basis points to 27.00%, making it one of the most hawkish central banks globally.
With inflation remaining elevated, “we believe that the BoG will continue to tighten monetary policy in 2023, bringing the policy rate to 29.00% by year-end”.
This, it said, will further restrict private-sector borrowers’ access to credit, likely delaying corporate investment plans and weighing on fixed capital formation over the year.
Business Analyst