By Toma Imirhe
Early data for 2025 from the Bank of Ghana suggests that the surprisingly strong economic growth Ghana achieved in 2024 will continue this year.
Data released at the latest Monetary Policy Committee press briefing at the end of March reveals that the first two months of this year have recorded increased economic activity, improved sentiments by both consumers and businesses as well as a build-up in business inventories. The central bank’s real sector indicators point to a sustained improvement in economic activity, amid significantly improved business and consumer sentiments.
The updated Composite Index of Economic Activity (CIEA) rose by 5.7% year-
on-year in January 2025, relative to 1.1% in December and 3.5% in January 2024, driven
by increased consumption, international trade activities, and private sector credit
growth. The CIEA measures economic activity, which is different from the Ghana Statistical Service’s measure of changes in economic output (Gross Domestic Product growth) but since economic activity is directly related to economic output, both measures tend to correlate with each other, loosely at least.
The BoG’s latest consumer confidence survey puts the index at 100.2 in February this year, up from 90.2 in December last year and 92.0 in February 2024. Similarly, the business confidence survey’s index reached 99.7 in February this year, up from 96.0 a year earlier. The index stood at 96.6 in December last year.
Enthused BoG Governor, Dr Johnson Asiama: “The confidence surveys conducted in February 2025 showed significant improvement in both consumer and business sentiments, buoyed by expectations for an improved macroeconomic environment”.
Added to all this, the Ghana Purchasing Managers’ Index moved above the 50-benchmark in February, implying increases in new orders by companies. The PMI measures the level of inventory holdings by businesses and an increase in the index indicates a build-up in inventory levels in anticipation of increased production and sales.
Ghana’s economic growth continued to rebound in 2024, exceeding initial expectations. Provisional data from the Ghana Statistical Service estimated real GDP growth at 5.7% in 2024, higher than the programmed growth rate of 4.0% for 2024, and the 3.1% recorded in 2023. Non-oil GDP grew at 6.0% compared with 3.6% recorded in 2023.
However, the President John Mahama administration has targeted growth of at least 4.0% for 2025, a target which the Parliamentary opposition has criticized as being too low, compared with the growth rate it left last year.
But the latest data from the BoG suggests that economic growth this year could match or even exceed last year’s performance if the early year trends continue over most of the rest of the year. Already, commercial banks are showing a willingness to increase their credit to the private sector in the face of treasury bill rates turning negative and loan quality starting to improve.
In February 2025, private sector credit recorded 26.9% annual growth, compared with 5.1% in February 2024. In real terms, credit growth was 3.1%, compared with a decline of 14.7% in February 2024.
Strong economic growth prospects have encouraged the BoG to focus on dragging down inflation – which has stubbornly stuck at just over 23% for several months now – through monetary tightening in the form of a 100 basis points rise in the Monetary Policy Rate to 28%.
However Ghana’s forecasted strong growth for 2025 faces headwinds from global events in the form of the evolving global trade war instigated by America’s President Trump administration last week and restrictive monetary policy as central banks around the world slow the pace of monetary easing in response to the stalling of disinflation.
“The persistence of these external headwinds may spill over to the domestic economy through the trade and financial channels, highlighting the need for policy to remain proactive” warned Dr Asiama although “both business and consumer confidence have improved, and private
sector credit growth is recovering, suggesting a positive outlook for the economy”.
