In brief
- Ghana’s economy showed early signs of outperforming expectations in 2025, with real GDP growing by 5.3% y/y in 1Q2025, well above the 4.9% posted in the same period of 2024 and our 4.3% forecast, despite ongoing fiscal restraint. Excluding the contraction in oil & gas sector, non-oil real GDP surged by 6.8% y/y, highlighting strong real sector momentum and bolstering our optimism for FY2025 growth, although fiscal tightening is a downside risk.
- From market stalls to megabytes: Trades and ICT lead the service charge to offset fiscal-dependent sectors. The services sector grew by 5.9% y/y, led by trade (+7.1%), ICT (+13.1%), transport (+8.6%), and financial services (+9.3%), contributing 2.54pp to overall growth in 1Q2025. We believe easing price pressures and improving business confidence boosted activity in the price-sensitive trades sub-sector. However, public administration (-4.2%) and education (-4.0%) contracted in the period, reflecting a drag from fiscal austerity.
- Robust growth in agriculture shows promise with a rebound in cocoa. Agriculture sector grew 6.6% y/y in 1Q2025, driven by strong crops performance (+6.7%), ostensibly contributing to the easing food inflation. Although the 1Q2025 growth predate government agriculture sector investments, we expect the GHS 1.5 billion allocation under the Agriculture for Economic Transformation Agenda in the 2025 budget to boost crops output from 3Q2025, sustaining momentum through FY2025.
- Industry sector loses steam as fiscal squeeze dampens momentum in construction with contraction in hydrocarbon. Industry growth slowed to 3.4% y/y in 1Q2025, dragged by a 22.1% contraction in oil & gas and weaker construction growth (+1.5%), amid fiscal restraint and paused contractor payments. In contrast, manufacturing grew strongly by 6.6%, supported by easing inflation and improved Cedi stability. While fiscal austerity and low oil sector investment remain downside risks, we think a faster rollout of VAT reform will boost manufacturing further. However, we retain our FY2025 forecast at between 3.8% – 4.8%, for now, pending the impact of fiscal squeeze on 2Q2025 growth.
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