Fitch Solutions projects economic slowdown in Ghana
Fitch Solutions has maintained its forecast for Ghana’s economic growth to decelerate, projecting a decline from 5.5% in 2024 to 4.4% in 2025, as the incoming government focuses on fiscal tightening measures. The UK-based firm also forecasts a reduction in the budget deficit, from 5.9% of Gross Domestic Product (GDP) in 2024 to 4.2% in 2025.
In its latest report on the country, Fitch stated that the provisional election results align with its expectations, with former President John Mahama winning the presidency and the National Democratic Congress (NDC) securing a parliamentary majority. The agency noted that the peaceful voting process and smooth transition of power were also in line with its predictions.
Given this outcome, Fitch Solutions confirmed that its macroeconomic outlook for Ghana remains unchanged. “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,” the report said.
Policy continuity expected under new administration
Fitch also predicted that despite the opposition’s victory, Ghana is likely to maintain broad policy continuity. The NDC’s comfortable parliamentary majority will enable the party to reverse some policies introduced by the outgoing New Patriotic Party (NPP), including the removal of certain taxes, such as a levy on electronic payments. However, the firm stressed that the fiscal impact of these changes will be minimal, as the taxes in question account for less than 3% of total government revenue. The NDC has also committed to introducing alternative revenue-generating measures, such as reducing tax exemptions and reviewing taxes on the ports and mining sectors, in line with fiscal consolidation objectives under Ghana’s ongoing IMF programme. Fitch noted that, despite earlier statements by Mahama indicating a potential review of the IMF deal, Ghana’s reliance on concessional financing for macroeconomic stability is likely to ensure stable relations with the International Monetary Fund (IMF).
