Spicing Up Ghana's Economy: A Snapshot of the Vibes in its Private Sector
July's cost inflation slowed down once more.
Things are sparking up in Ghana's private sector, and the party's just getting started! Here are the latest revelations:
- Cost Pressure Chill: The heat is off as overall input prices have cooled down, dipping to their joint-softest in a leisurely 38 months. This relaxed environment is doing wonders for demand.
- Upward Mobility: That's right, new orders are on the rise, although at a less fervent pace since February. It's all about competitive pricing and stronger client demand in the current climate.
- Business on the Rise: Optimism is in the air, and businesses are responding by increasing their output. The rate of expansion quickened compared to June, and the muted price pressures didn't hurt either.
- Peso Perks: The softer cost pressures show up in various forms, from lower purchase prices to staff costs reducing to an 18-month low. Higher fuel prices and tax increases contributed more to rising purchasing costs, while higher staff wages were implemented to help workers cope with the rising cost of living and transportation fees.
- Output Prices (Not So) Hot: Though output prices rose, the pace was still the second slowest in 28 months. Some firms even opted against raising charges due to lower input costs.
- Faith in the System: Business confidence is skyrocketing, reaching a six-month high. Optimism stemmed from the positive economic climate and the prospect of more growth in new orders ahead.
- Stockpiling the Good Times: With confidence booming, companies started adding to their inventories in July. This was made possible by a continued solid increase in input buying.
- Hiring Spree: Job creation is up, reaching a level not seen since April. It's a busy time for businesses as they're juggling increased workloads.
- Pacey Procurement: Supplier lead times shortened significantly at the start of the third quarter, setting a record for the quickest delivery times ever. Close to 21% of companies reported shorter lead times, while only 5% signaled a worsening situation.
- Andrew's Take: "The private sector in Ghana is living it up! Inflationary pressures have eased, demand conditions are improving, and output continues to rise—all indicators point to a promising third quarter," says Andrew Harker, Economics Director at S&P Global Market Intelligence.
The Unavoidable Truth: Current Economic Trends in Ghana
Ghana's economy is buzzing with a mix of new growth and time-tested strategies. Here are some key highlights:
- Seasoned Growth: Ghana's economy has been steadily climbing out of the economic doldrums. The first quarter of 2025 saw GDP growth of 5.3%, with promising projections for the rest of the year[1].
- Balanced Act: While the oil and gas sector has traditionally played a significant role, Ghana is moving towards a more balanced economy. Non-oil sectors accounted for 6.8% of the GDP growth in the first quarter of 2025[3].
- Sectoral Stars: The agricultural sector has been shining bright, with a 6.6% growth rate in Q1, boosted by crop and fishing performances[3]. Similarly, the services sector, particularly in ICT, trade, and transport, has contributed significantly to GDP growth[3].
- Inflation Anxiety: While economic growth brings reasons to celebrate, inflation remains a looming concern. Reported inflation for the year could hover around 11.9%[5].
- Fiscal Balance: Efforts are being made to balance the budget, though the pace of consolidation might slow down due to reduced fiscal consolidation needs[4].
- Private Sector Prospects: The strengthening economy and diversification efforts provide fertile ground for the private sector. Still, challenges such as inflation and potential fiscal policy adjustments must be carefully managed to maintain stability.
all that glitters isn't gold, but Ghana's current economic trends sure look shiny. The future of Ghana's economy and private sector remains promising, provided the underlying challenges are faced head-on.
- The private sector's growth in Ghana is marked by decreasing input prices, leading to increased demand, as reported in the latest report.
- Businesses are increasing their output and exhibiting optimism due to relaxed cost pressures, according to the Business Confidence Index.
- The agricultural and services sectors, particularly in ICT, trade, and transport, are making significant contributions to Ghana's GDP growth in the first quarter of 2025.
- Despite promising economic growth, inflation remains a concern, with projected levels for the year around 11.9%.
- The private sector in Ghana stands to benefit from the strengthening economy and diversification efforts, but faces challenges such as inflation and potential fiscal policy adjustments.
