Ghana’s economic growth is projected to decline to 4% in 2025, according to ISSER, raising concerns about worsening poverty. Factors contributing to this include reduced capital expenditure and ambitious revenue targets that may not be met. The fiscal outlook is troubling, with high deficits and dependence on domestic borrowing posing risks to growth.
The Institute of Statistical, Social and Economic Research (ISSER) has cautioned that Ghana may face worsening poverty levels if its economic growth continues to be feeble. The projections indicate a slowdown in growth in 2025, despite a recovery in 2024, primarily due to reductions in capital expenditure, stringent fiscal policies, and delays in implementing new economic initiatives.
In addressing stakeholders, ISSER Director Professor Peter Quartey indicated that Ghana achieved a GDP growth rate of 5.7% in 2024, largely driven by sectors such as ICT, construction, and mining. However, growth is expected to decline to 4% in 2025, falling below the Sub-Saharan Africa average of 4.2% due to reduced capital investment, estimated at 2.5% of GDP, along with a slow rollout of the 24-hour economy policy.
Professor Quartey emphasized that the 24-hour economy, considered a medium- to long-term strategy, requires time to manifest significant results. The fiscal situation reveals considerable obstacles, as Ghana did not meet its 2024 revenue and deficit objectives. The country recorded a fiscal deficit of 7.9%, surpassing the revised target of 4.2%.
Professor Quartey raised concerns over debt sustainability; although the debt-to-GDP ratio decreased to 61.8% due to restructuring measures, he emphasized vigilance in managing borrowing to prevent a return to crisis conditions. The reliance on domestic borrowing could potentially stifle private sector credit access and escalate interest rates.
Warnings were also issued regarding the government’s ambitious target of a 45.4% increase in income and property tax revenue by 2025. Professor Quartey questioned the feasibility of achieving such a target without comprehensive policy measures and underscored the necessity for research-backed policies and regular reviews to avert mid-year financial shortfalls.
In discussions of the economic landscape, Professor Quartey highlighted ongoing weaknesses in key sectors such as agriculture and industry, both vital for employment. Agricultural growth hit only 2.8% in 2024 and is expected to rise modestly to 3.1%, while industrial growth may fall from 7.1% to 3.8% this year. Such declines could lead to fewer job opportunities and increased living costs for households.
He urged the enforcement of fiscal responsibility laws and regular assessments to prevent budgetary disruptions; stressing the importance of avoiding the repetition of ineffective, data-deficient policies to restore macroeconomic stability in Ghana.
In conclusion, Ghana’s economic outlook for 2025 appears precarious, with ISSER highlighting potential increases in poverty levels if sluggish growth persists. The emphasis on maintaining fiscal discipline, addressing revenue generation challenges, and carefully managing borrowing will be critical in navigating these economic challenges. Without proactive measures and research-driven policies, the risk of mid-year budgetary shocks and further economic deterioration remains significant.
Original Source: www.myjoyonline.com
