Weak Consumption, High Unemployment Threaten Ghana’s Recovery – Databank Research

Databank Research has warned that weak household consumption and persistently high unemployment could pose a greater risk to Ghana’s economic recovery, even as fiscal consolidation efforts continue to stabilize public finances.

In its economic outlook for 2026, the research firm highlighted that while policy measures aim to stimulate growth, structural constraints in the labour market mean that job creation is likely to remain slow. “Ghana’s labour market remains soft, and the creation of jobs may take time to materialise. We expect hiring conditions to stabilise gradually as growth strengthens, but persistent structural constraints suggest a slow recovery in employment momentum,” the report noted.

The findings come against the backdrop of monetary easing by the Bank of Ghana, which lowered its policy rate by 250 basis points to 15.5% in January 2025. The move was intended to support credit growth and revive business activity, even as the banking sector continued to contend with an elevated Non-Performing Loan (NPL) ratio of 20–23 percent, excluding provisional losses. Databank Research emphasised that softer credit conditions could facilitate business recovery and help resolve legacy debt through refinancing mechanisms, supporting both corporate and household balance sheets.

On inflation, the research firm projected headline inflation to decline to 5.09 percent by the end of 2026, significantly outperforming the central bank’s target range of 8 percent ± 200 basis points. The expected moderation is attributed to anticipated improvements in food supply, a more stable exchange rate environment, and previous contractionary measures by the central bank that absorbed excess liquidity from 2024.

Databank further explained that “we expect bumper food harvests and smoother supply chain dynamics to keep month-on-month CPI volatility below 6%. As softer fiscal actions take hold, we expect cost-push pressures to remain fairly contained,” underscoring the positive impact of both agricultural output and prudent monetary management on price stability.

Overall, the report underscores a delicate balance for Ghana: while macroeconomic indicators such as inflation are improving, weak domestic demand and a slow recovery in employment remain critical challenges. Policymakers are therefore encouraged to complement fiscal and monetary measures with initiatives that stimulate consumption, enhance job creation, and strengthen credit access to support a more inclusive and sustainable economic recovery.