Business Outlook of Ghana
Entering 2024 with optimism, Ghana anticipates continued economic stability, building on the positive trends of 2023 that marked a recovery from the challenges faced in 2022. In 2022, the Ghana cedi depreciated by 30% against the US$, mostly due to the over 50% depreciation in the second half of the year. The currency bounced back 2023 with a year-to-date depreciation of 15.57% to the US$ in the retail market, selling at 12.18% to the US$. The performance of the cedi in 2023 was largely influenced by a 3-year International Monetary Fund (IMF) program, where the country expects to receive US$600 million every six months.
Currency depreciation has paused, giving some respite to businesses and banks. The US$ sells at 12.58 in the retail market. In dealing with this problem the Bank of Ghana has opened a window for downstream petroleum companies who are the biggest patronisers of US$ to a forward rate option, to help manage the currency. Fitch solutions forecast that the Ghanaian economy will expand by 3.5% in 2024, up from a weak 2.7% in 2023, driven by stronger private consumption. Inflation will moderate substantially in 2024 – due to statistical base effects and stronger exchange rate dynamics, which will ease financial pressure on households and drive-up domestic consumption. Inflation will stay elevated throughout 2024 (Allianz). Prices rose sharply in late 2022, hitting +54% year-on-year in December 2022 and remained elevated throughout 2023, closing the year at around 23%.
Ghana expects to reach a debt-relief deal in the coming weeks from its official creditors to qualify for further disbursements under the US$3Bn International Monetary Fund loan program. The positive outlook of the country could be influenced by the surge in the prices of cocoa, gold and oil & gas.
Cocoa futures prices have surged by more than $1,000 or nearly 40% since the start of the year to hit an all-time high of $5,874 per metric ton, as bad weather conditions hammer crop yields in West Africa. The gold price in the world market has already surpassed $2,000, currently trading at a spot price of $2,029.
Further to the gains made by the country in cocoa, gold and oil and the agreement with the foreign bond holders, Ghana has recently discovered lithium and secured its first-ever lithium lease agreement with Lithium Atlantic, an Australian mining firm, for a project in the Central Region of Ghana. Under the arrangement, the Government of Ghana is entitled to a 13% free carried interest in the project.
The year 2024 also marks a key milestone in the political landscape of Ghana, as the country goes to polls to elect a new President and Members of Parliament in December. There are already discussions to bring the election forward to November to help manage the difficulties that plague the country during elections whenever there is a run-off. How this proposal is managed by the Electoral Commission of Ghana and other political stakeholders will be key in the countdown to the election.
To learn more about Ghana Economic outlook read our Axendo – PangeaRisk repost for Ghana 2023.
Discover more about the economic situation in other African countries by exploring the articles crafted by the Axendo team for Kenya and Nigeria.
References :
- Charles Boateng
- Business Development Manager, Ghana