Ghana: GDP growth gathers pace in Q4 and hits one-year high
GDP growth gathered pace in the fourth quarter of 2023 and hit a one-year high of 3.8% year on year, up from 2.2% in the third quarter. Consequently, the economy grew 2.9% overall in 2023, slowing from 2022’s 3.8% rise, but above the IMF’s estimate of a 2.3% increase.
Domestically, the acceleration chiefly reflected stronger private consumption growth, which came in at 9.9% annually (Q3: +9.1% yoy), the highest since Q1 2022. Moreover, government spending rebounded and posted a 2.8% year-on-year increase from Q3’s 6.2% decline. Meanwhile, fixed investment fell at a slower pace of 10.5%, improving from the prior quarter’s 16.3% plunge.
On the external front, exports of goods and services returned to growth in Q4 and rose 6.0% year on year (Q3: -4.8% yoy), hitting a four-year high growth rate. Meanwhile, imports of goods and services also rebounded, tallying a four-year high increase of 15.1% in Q4, up from the prior period’s 5.5% contraction.
From a production point of view, the acceleration in GDP growth was driven by broad-based improvements: Growth in the services and agricultural sectors accelerated, and the industrial sector returned to growth in Q4.
Our Consensus is for momentum to carry over into 2024, with GDP growth accelerating from last year. The improvement will be due to stronger government spending growth ahead of the 7 December general election, and a rebound in fixed investment as the deal with the IMF anchors investor sentiment. A downside risk is adverse weather leading to lower-than-anticipated cocoa production.
Analysts at the EIU added further insight regarding the 2024 external sector outlook:
“Import demand will continue to contract, reflecting subdued private consumption. The recommissioning and expansion of the Bibiani gold mine in western Ghana, […] will boost export earnings.”