The economy’s performance, especially in the second quarter of this year, is sparking discussions about a possible interest rate cut by the Bank of Ghana (BoG).
Recent data from the Ghana Statistical Service (GSS) show that the economy grew by 5.8% in the first half of 2024, surpassing the initial growth target of 1.5% for the year.
The second quarter of 2024 was particularly strong, with GDP growth reaching 6.9%, which the GSS describes as “the highest quarterly GDP growth in five years.”
This positive economic performance has heightened expectations that the central bank may consider reducing interest rates at its upcoming Monetary Policy Committee (MPC) meeting in September.
Currently, the BoG maintains a high interest rate of 29% to combat inflation and stabilize the Cedi. However, with inflation declining from its peak of 54.1% in December 2022, analysts believe there may be potential for policy adjustments.
Apakan Securities, an investment firm, commented on the economic data:
“The second-quarter GDP figures suggest a more resilient economy than many had expected, especially in light of the debt restructuring challenges.
A modest rate cut could be considered as the central bank aims to balance inflation control with growth support.”
This optimism comes as the industrial sector remains a significant driver of growth, expanding by 8%. Within this sector, mining and quarrying reported a 13.9% growth.
The agriculture and services sectors also contributed to the overall economic expansion, although both may encounter challenges in the coming months.
Nonetheless, some analysts urge caution regarding a potential policy shift. While the industrial sector has performed well, other sectors may face hurdles that could hinder growth in the latter half of the year.
According to GSS data, the agriculture sector, which grew by 5% in the first half of 2024, may experience a slowdown in the coming months due to poor rainfall affecting crop yields.
Similarly, the services sector—particularly telecommunications—faces difficulties that could limit its overall growth contribution.
Market analyst Kwadwo Acheampong remarked, “The 6.9% growth in Q2 is a significant improvement from 2023.
While both the services and agriculture sectors showed resilience, it remains to be seen if this momentum will carry into the second half of the year.”
Market analysts have noted that while lowering interest rates could stimulate domestic investment and consumption—potentially bolstering further economic growth—the central bank must weigh this against the necessity of maintaining inflation control and currency stability.
