Ghana’s Economy: Downside risks could come from possible policy reversals, others – AfDB Report

The African Development Bank Group has said in its African Economic Outlook report that Ghana’s Gross Domestic Product (GDP) is projected to slow to 4.5% in 2025 and 4.8% in 2026 attributed to activity in the mining sector, reduced fiscal consolidation momentum and higher interest rates.

Inflation is projected to ease to 15.5% in 2025 and 9% in 2026 supported by tight monetary policy, reduced exchange rates depreciation, and lower food prices.

The report said that the fiscal deficit is projected to narrow to 3.5% of GDP in 2025 and 3% in 2026 supported by the ongoing fiscal consolidation efforts and public financial management reforms, including enhanced fiscal responsibility framework and new rules to tighten expenditure commitments.

Regarding public debt to GDP ratio, the AfDB report said the debt is projected to decrease further to 66.4% in 2025 as debt restructuring with commercial creditors and revenues increase following improved tax compliance and reduced tax expenditure.

The current account balance is projected at 2.6% of GDP in 2025 and 1.4% in 2026 attributed to improved exports of oil and gold export, it said.

The report further pointed out that downside risks to the outlook could emanate from climate change, possible policy reversals, direct and indirect effects of US tariff increase.

“Staying on the fiscal consolidation path will help mitigate the risks,” it cautioned.

Regarding Ghana’s wealth, the report noted that the wealth was estimated at $845 billion in 2020, up 69% from 2010. It is made up of produced capital (also known as manufactured capital), financial capital ($88 million), human capital ($475 billon), and natural capital ($306 billion), and a negative net foreign asset (–$25 billion) because Ghana was a net debtor. Natural capital includes renewable and nonrenewable natural resources, amounting to $267 billion and $39 billion, respectively.

Ghana has the potential to increase its wealth through domestic and external savings mobilisation, it said.

“In the short term, this entails ensuring macroeconomic stability, enforcing rules, laws, and regulations, and improving the business environment—and in the medium to the longer term, fast-tracking economic transformation and properly valuing and accounting for the natural capital and associated ecosystems.

Ghana has embarked on a fiscal consolidation program, and efforts are underway to value and account for natural capital by developing the National Plan for Natural Capital Accounting. Initiatives are in place to compile pilot NCAs and integrate them into the System of National Accounts. The integration would increase Ghana’s wealth profile, increase creditworthiness, and unlock sustainable financing resources through domestic resource mobilisation,” the report stated.

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