American credit rating agency, Fitch, is forecasting that Ghana’s economic growth could shrink up to 4.5% by the end of the year.
According to the agency, the shrink is expected to be between 0.3% and 4.5%.
The forecast was contained in the August 2021 edition of Fitch Solutions West Africa Monitor Report
Fitch is one of the big three credit rating agencies in the world, the other two being Moody’s and Standard & Poor’s.
Despite this, Fitch calls the forecast healthy as the base effects from the 2020 slowdown due to the Covid-9 pandemic, fade.
The 4.5% growth rate expected is slightly lower than the expected 4.8 for the year, which Fitch forecasts will be lifted by expansion in the agriculture and services sectors, particularly recovery in the hospitality sub-sector.
It further forecasts that spending is likely to tick up in the second half of the year as the economic recovery gathers momentum, resulting in greater demand-side inflationary pressures.
“We expect that the rise in private consumption and business investment in the coming months will result in robust real GDP growth of 4.8% in 2021, as against 0.4% in 2020.”
It also said, “We expect growth to accelerate in the coming months as the government further relaxes social distancing rules. Restrictions were tightened in quarter one 2021 in response to the second wave of infections, and have remained fairly stringent since then – despite the launch of the government’s vaccination drive on March 1. Although the pace of vaccinations slowed in late quarter two 2021 as a result of supply and distribution challenges, we expect the programme to gain momentum in second half-year of 2021, thus facilitating greater reopening and a rise in consumer and business confidence.”
Fitch has revised its nominal GDP 2021, from the earlier forecast of $70 billion. This will translate into per capita income of $2,466.
Last year, the size of the economy was estimated at $72.4 billion, translating into a per capita income of 2,328 dollars.
But Ghana still remains the 8th biggest economy on the African continent, following Ethiopia closely, whose GDP is US$93.97 billion.