Fitch Solutions Predicts Ghana's GDP Growth to Hold Steady at 4.4% in 2025

Ghana's economy is expected to experience a slowdown in growth, from 5.5% in 2024 to 4.4% in 2025, as the new government implements fiscal austerity measures according to Fitch Solutions.

This forecast is based on the assumption that the new administration will prioritize reducing the budget deficit, which is projected to narrow from 5.9% of GDP in 2024 to 4.2% in 2025.

According to the Uk-based firm, despite the change in government, Ghana is likely to maintain broad policy continuity, with the National Democratic Congress (NDC) expected to build on existing policies. The NDC's parliamentary majority will, however, allow for some divergence from policies implemented by the previous administration, such as the removal of certain taxes.

In its latest report on Ghana, Fitch Solutions stated “The provisional election results are in line with our prediction of Mahama winning the presidency and the NDC {National Democratic Congress] securing a parliamentary majority. The largely peaceful voting process and the apparent smooth transfer of power also matched our expectations”.

“As such, we maintain all our macroeconomic forecasts for Ghana: we continue to project that real economic growth will decelerate from 5.5% in 2024 to 4.4% in 2025, as the new government pursues fiscal tightening. Accordingly, we project”, it stated.

They added that the fiscal impact of these changes is expected to be minimal, with the targeted taxes generating less than 3.0% of total revenue. To offset this Fitch Solutions stated that the NDC has committed to introducing alternative revenue-generating measures, including reducing tax exemptions and reviewing taxes on ports and the mining sector.

“In fact, the NDC has committed to introducing alternative revenue-generating measures, including reducing tax exemptions and reviewing taxes on ports and the mining sector, in line with fiscal consolidation objectives under Ghana's IMF programme. Given Ghana's dependence on concessional financing for macroeconomic stability, we think that relations with the IMF [International Monetary Fund] will remain stable, despite Mahama’s earlier statements to revisit the deal”, it added.

Ghana's relations with the International Monetary Fund (IMF) are expected to remain stable, despite earlier statements from President Mahama to revisit the deal. This is due to Ghana's dependence on concessional financing for macroeconomic stability.

Source: Lead News Online