World Bank cuts Ghana’s 2025 growth forecast to 3.9%, citing inflation and climate risks

Ghana’s economic outlook for 2025 has been revised downward by the World Bank, with the country’s gross domestic product (GDP) growth now projected at 3.9%, lower than the government’s 4.4% target.

This updated estimate, released in the April 2025 edition of the World Bank’s Africa’s Pulse report, also marks a dip from the previous projection of 4.3%. According to the Bank, persistent inflation and external challenges are the key reasons behind the downgrade.

Despite the cut, the report maintains a cautiously optimistic view of Ghana’s medium-term prospects. Growth is expected to rebound to 4.6% in 2026 and rise further to 4.8% in 2027.

The World Bank also pointed to climate-related challenges that have significantly affected the economy. It noted that “climate-induced events such as floods and droughts continue to erode national budgets across Africa by up to 9%, causing economic setbacks of between 2% and 5%.” In particular, unpredictable weather patterns have disrupted cocoa production in Ghana and Côte d’Ivoire—two of the world’s top cocoa exporters.

However, there are signs of recovery. The report states that Ghana is among a handful of African countries showing early improvement in 2025. This is supported by high-frequency indicators like the Purchasing Managers Index (PMI), which climbed from 47.9 in January to 50.6 in March—crossing the 50 mark that signals expansion in business activity.

“Business activity in Mozambique and Ghana rebounded in February 2025,” the report observed. “The modest uptick in Ghana was driven by increased demand and a resurgence in new business engagements.”

Regionally, Sub-Saharan Africa is expected to see a slight increase in economic growth, rising from 3.3% in 2024 to 3.5% in 2025, and reaching 4.3% by 2026–2027. But growth remains sluggish in the region’s three largest economies—Nigeria, South Africa, and Angola. When these are excluded, the rest of Sub-Saharan Africa is forecast to grow by 4.6% in 2025 and 5.7% in 2027.

The World Bank concluded with a word of caution, noting that “elevated downside risks—including global policy uncertainties, climate shocks, and fiscal constraints—pose ongoing threats to a sustained and inclusive recovery across the continent.”

Source: dailymailgh.com