In brief
- The Ghanaian economy moved out of the sand onto the green in 2Q2024, beating all the odds of continued modest recovery by posting a growth rate that is off the charts.
- Overall real GDP growth surpassed expectation with an expansion of 6.9% year-on-year in 2Q2024 against the market expectation of 3.3%. Excluding the effect of oil & gas, non-oil real GDP growth was slightly stronger at 7.0% y/y while the informal sector expanded by 6.3% y/y with largely broad-based improvements across key sectors.
- Our review indicates that the acceleration in growth momentum in 2Q2024 was the fastest pace since 4Q2021 which culminated in FY2021 growth rate of 5.1% (vs 0.5% in FY2020). Notably, we observed a low base effect for most of the sub-sectors within the industrial sector, which powered industry growth to 9.3% y/y in 2Q2024 from a contraction of 2.6% in the corresponding quarter of 2023. Growth was firmer in the agriculture sector with an expansion of 5.4% y/y in (vs 4.4% in same period 2023) while services however witnessed a slight moderation to 5.8% y/y (vs 6.0% a year ago).
- Our updated growth model suggests a stronger-than-expected bounce from the low industrial base last year with additional tailwind from election-related spending and a stable FX in 2H2024. Against this backdrop of strong favourable base effect and potential spending boost, we raise our FY2024 real GDP growth forecast by 1.8pp to between 4.7% – 5.7% (midpoint: 5.2%) from our earlier forecast of 2.9% – 3.9%.
- We expect the new wells on the Jubilee South East (JSE) oil field to support the positive growth momentum in the extractive sector. The ongoing payments to local contractors and the low base from last year will sustain the growth in the construction sector, with positive spillovers for banks’ loan book, asset quality and overall GDP growth. In the services sector, we tip ICT, trade, and finance & insurance activities to continue the positive momentum. However, reports of dry weather conditions and the seemingly intractable illegal mining activities will cap the upside for agriculture.
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