The business climate will remain fragile in the coming months, while private consumption is expected to slow this year, largely due to the planned implementation of the 1.5% tax on electronic transfers (E-levy) , revealed Fitch Solutions in its latest Sub-Saharan Africa update. .
According to the research arm of ratings agency Fitch, Ghana’s Purchasing Managers Index – which determines the direction of economic trends in the manufacturing and services sectors – fell for the first time in seven months due to the increase in the prices of certain goods and services.
Ben Weaver, an analyst with the Sub-Saharan Africa country risk team at Fitch Solutions, said high commodity prices are impacting consumption and the private sector.
“We are already feeling the impact of high prices on the private sector, amid high input prices and supply chain concerns.”
“We expect corporate sentiment to remain fragile over the coming quarters. Additionally, we expect the introduction of the 1.5% E-Levy to create further headwinds on domestic demand with a direct effect on mobile money, which is actively used by 40% of Ghanaians aged 15 and over”.
“Against this backdrop, we expect private consumption growth to slow in 2022,” Weaver said.
Despite this, foreign investment is expected to increase, including new investment in gold production by GoldFields and AngloGold Ashanti.
“Rising foreign investment will also prevent a sharp downturn in the economy. We further expect strong fixed investment growth of 5% in 2022, which was above the pre-pandemic 5-year average of 2.7%,” Weaver noted.
“While fixed investment will pick up as projects delayed by the COVID-19 pandemic resume and rising commodity prices spur foreign interest in the country’s abundant natural resources, he said this will not be enough to compensate for the weakness of other components”, he concluded.