Household spending in Ghana to hit ¢104bn – Report

Real household spending in Ghana is expected to grow by 4.1 per cent this year to ¢104.9.

This is compared to a contraction of 1.1 per cent last year.

According to Fitch Solutions, the forecast in improving consumer spending this year was in line with the expected real growth rate of the economy by 4.8 per cent .

“Our forecast for an improvement in consumer spending in Ghana in 2021 is in line with our Country Risk team’s forecast that the Ghanaian economy will grow by a real rate of 4.8 per cent year-on-year over 2021, following growth of just 0.4 per cent year-on-year over 2020. Private consumption will be the main driver of the economic recovery, and contribute 2.7 percentage points to headline growth,” it said.

It said “Household spending (an estimated 71.6 per cent of Gross Domestic Product in 2020) is likely to have grown at a moderate pace in H121 [half-year 2021] as the easing of social distancing restrictions allowed both formal and informal retail activities to open up, while the gradual normalisation of business activities resulted in improving labour market conditions”, it explained further.’

It pointed out that a successful vaccine rollout would aid the recovery of consumer spending growth in Ghana, as it would reduce the risk of further strict lockdown measures.

“We forecast Ghana’s unemployment rate to average 4.1 per cent in 2021, decreasing from 4.5 per cent in 2020. This means that average unemployment in Ghana will return to the pre-COVID-19 level of 4.1 per cent in 2019”, Fitch Solutions said.

It added that “our forecasts take into account risks that are highly likely to play out in 2021, including the easing of government support. However, there are risks to the outlook that if they do start to play out, will lead to forecast revisions.”