Ghana’s quarterly growth halves as inflation and debt hammer economy

Accra —  Ghana’s economic growth slowed to 3.3% year on year in the first quarter of 2022, data showed on Wednesday, marking a setback in the country’s post-pandemic recovery.

“These are the lowest growth rates that we have recorded, discounting the contractions that we recorded during the Covid-19 era,” government statistician Samuel Kobina Annim told a news conference.

The first-quarter figure is less than half the 7% growth seen in the final quarter of 2021, and slower than the 3.6% growth in the first quarter of last year, he said.

Ghana is battling a set of challenges including runaway inflation, a depreciating local currency and high public debt.

Its government has consistently ruled out asking the International Monetary Fund (IMF) for assistance despite analysts warning it is close to a debt crisis.

The West African gold, oil and cocoa producer’s GDP grew 5.4% in 2021, according to the Ghana Statistical Service, though the IMF estimates more modest growth of 4.2% last year.

Consumer inflation hit 27.6% year on year in May, an 18-year high, despite a raft of spending cuts announced in March.

The statistics agency also said on Wednesday that producer inflation rose to 33.5% in May from 31.2% in April.

“The softness of growth will probably reinforce already high credit concerns,” said Razia Khan, Standard Chartered’s chief Africa economist.

The central bank raised its main interest rate by 200 basis points to 19% last month, the second hike this year to buttress macroeconomic stability.

The IMF in April downgraded its 2022 growth forecast for Ghana to 5.2%, from a 6.2% prediction in October 2021.

A JPMorgan index of Ghana’s bonds has dropped 38% in the past six months, compared to about 22% for Africa as a whole, according to Refinitiv data.

The cedi currency has shed over 22% against the dollar since the start of the year.

Reuters