Will Ghana sustain GDP growth trajectory?

Ghana's economic landscape has seen a significant uptick, with the country's economy growing by 7.2 per cent year-on-year in the third quarter of this year, according to data from the Ghana Statistical Service. The big question now is whether Ghana can sustain this momentum as President-elect John Mahama prepares to take office next year. Richmond Frimpong, Advisory Board Chair at FLF Africa, provided insights on the key drivers behind this growth and the challenges that lie ahead. The recent peaceful transition of power has instilled confidence, but there are red flags that need to be addressed to ensure continued growth. Frimpong highlighted that the main drivers of growth have been the industry, services, and agriculture sectors, with investments in these areas yielding positive results. However, he cautioned that there are risks involved, especially in terms of government expenditure, net exports, and the need to diversify the economy beyond mining and telecoms. He emphasized the importance of maintaining fiscal discipline and redirecting expenses into productive sectors to sustain and scale up the growth trajectory. One of the key challenges facing Ghana is the need to strike a balance between stimulating economic growth and maintaining macroeconomic stability. Frimpong suggested that the new administration should focus on policies that enhance productivity in the manufacturing sector and expand the services industry beyond telecommunications. He also stressed the importance of addressing structural challenges and ensuring complementarity between monetary and fiscal policies. The concept of a 24-hour economy has been a focal point for the incoming administration, with the aim of boosting employment and economic activity. Frimpong highlighted the urgent need for swift policy action to support this initiative, particularly in terms of leveraging existing economic zones to spur growth in manufacturing and create opportunities for job creation. While the infrastructure may take time to develop, he underscored the importance of passing policies quickly to unlock the potential of these zones and drive immediate gains in GDP. Looking ahead, Ghana faces the task of balancing short-term priorities with long-term sustainable growth strategies. The incoming government will need to navigate policy reforms, address red flags in the economy, and foster an environment conducive to investment and innovation. By focusing on diversification, productivity, and fiscal discipline, Ghana has the potential to build on its current growth momentum and chart a path towards economic prosperity.