Ghana’s Economy Grows at Slowest Pace in Almost a Year

Ekow Dontoh
·2 min read
2

(Bloomberg) -- Ghana’s economy expanded at the slowest pace in almost a year in the second quarter as fiscal tightening and high inflation crimped output.

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Gross domestic product grew 3.2% in the three months through June from a year earlier, compared with a downwardly revised expansion of 3.3% in the previous quarter, Government Statistician Samuel Kobina Annim told reporters in the capital, Accra, on Wednesday. That was slightly lower than the median of seven economists’ estimates in a Bloomberg survey for expansion of 3.3%.

The cedi declined 0.1% to 11.4988 per dollar at 10:50 a.m. in Accra, while the yield on Ghana’s dollar bonds maturing in 2032 rose 3 basis points to 23%.

Services grew 6.3% in the quarter from a year earlier, the same as the prior three months, after the number was revised lower. Industry contracted for a third consecutive quarter to 1.9%, while growth in the agriculture sector slowed to 6% from a revised 6.4% in the three months through March.

Growth in the quarter was crimped by new taxes and utility price hikes, which raised the cost of production, Patrick Asuming, a senior lecturer at the University of Ghana Business School, said by phone ahead of the release. Inflation averaged more than 40% in the quarter, compared with 27% in the same period last year.

Output is likely to remain muted as the government seeks to rein in spending and reduce its debt load.

The continent’s largest gold producer is tightening its fiscal belt and reorganizing most of its debt, valued at $50 billion at the end of April, to make it sustainable, as part of terms of a $3 billion International Monetary Fund program.

The West African nation will undergo its first review under the IMF program later this month.

The Finance Ministry in July almost halved its forecast for growth this year to 1.5% due to a broad slowdown in major sectors of the economy. The nation expects growth to rebound to 2.8% next year, 4.7% in 2025, and 4.9% in 2026.

Read More: Ghana Cuts 2023 Growth Forecast but Upbeat on 2024 and 2025

--With assistance from Simbarashe Gumbo.

(Updates with chart. An earlier version corrected period of when growth was slowest since in headline and introduction)

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