Ghana’s economy is showing signs of steady recovery, buoyed by a mix of factors including an uptick in tourism, according to the Bank of Ghana (BoG). In its latest Monetary Policy Committee (MPC) briefing, the bank highlighted that the economy’s performance, as captured by the Composite Index of Economic Activity (CIEA), grew by 2.2% in September 2024 compared to a contraction of 0.4% in the same period last year.

0

Among the key drivers of this improvement were increased port activities, heightened consumer spending, robust construction, higher private sector credit, and a resurgence in international tourist arrivals. The growth aligns with global trends favouring tourism recovery after the COVID-19 pandemic crippled international travel.

1

"In the third quarter, the Bank’s high frequency real sector indicators pointed to a sustained pick-up in economic activity. The updated real Composite Index of Economic Activity (CIEA) recorded an annual growth of 2.2 percent in September 2024, compared to a contraction of 0.4 percent in the corresponding period of 2023.

2

Major drivers of the improvement in economic activity include increased port activity, households and firms consumption of goods and services , construction activities, credit to the private sector,and higher tourist arrivals," the latest Monetary Policy Committee (MPC) meeting report reads.Ghana’s tourism sector has experienced growth after a steep decline during the pandemic. While international arrivals dropped drastically from 1.

3

3 million in 2019 to 355,000 in 2020, the easing of restrictions and border openings in 2021 began reversing the trend. Recent data shows that tourist numbers continue to improve, particularly from key source markets such as the US, UK, and Nigeria. Tourism contributed an estimated $372.6 million in international spending in 2020, a significant decline from pre-pandemic levels but indicative of its potential as a revenue generator.

4

The government’s strategic efforts, including the expansion of infrastructure and initiatives like the Year of Return, have been instrumental in reviving the sector.Despite the positive outlook, the Bank of Ghana cautioned against global risks, including rising energy and food prices due to geopolitical tensions and trade protectionism. Domestically, inflation remains a concern, with projections placing it at 20.

5

1% in 2025, slightly higher than earlier forecasts. However, strong macroeconomic measures and robust policy implementation are expected to anchor growth and stability.

6

"While global economic conditions remain favourable, the strength of the US economy coupled with a strong United States dollar and the possibility of a resurgence in global energy and food prices arising from trade protectionism, geopolitical conflicts, and extremeweather conditions will have to be monitored closely for policy responses to ensure stability in the economy. Overall, headline inflation which stood at 20.

7

4 percent in August, rose to 21.5 percent in September and then further to 22.1 percent in October 2024. The rise in inflation has largely been driven by food price pressures and some exchange rate pass-through effects from previous depreciation of the currency. At the time of the last MPC meeting, average inflation forecast a year ahead which stood at 19.0 percent has increased slightly to 20.1 percent at this forecast round.

8

The horizon for inflation to get back within the target band of 6-10 percent has slightly shifted forward to Q42025 from the original forecast period of Q32025," it added.The BoG maintained the policy rate at 27%, emphasising the need for consistent vigilance against potential disruptions, including uncertainties tied to the upcoming elections and external debt restructuring challenges.

9

"In the near-term, strengthening of the currency will augur well for future price developments. Under the circumstances, the Monetary Policy Committee decided to keep the policy rate unchanged at 27 per cent," the statement said.

10

Looking ahead, a positive assessment by the International Monetary Fund (IMF) of Ghana’s economic programme could result in a $360 million disbursement this month, further improving foreign exchange reserves and stabilizing the cedi.

11