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Ghana’s private sector sees positive signals in Q2

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Ghana’s private sector is showing positive signs at the start of Q2 2023, according to a report from global rating agency S&P. The report states that the opening month of Q2 saw a sustained improvement in the private sector as customer demand improved and inflationary pressures eased, leading to higher business activity.

Firms expanded their employment and purchasing activities to meet the increased orders, which further boosted the economy. The S&P Global Ghana Purchasing Managers’ Index (PMI) posted 51.3 in April, up from 50.9 in March and above the no-change mark for the third month running. The report observed that this signalled a modest improvement in the health of Ghana’s private sector, and one that was the largest since December 2021.

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Despite the positive outlook, Ghana’s economy has been going through difficulties with inflation hovering at 45% in March. However, the inflation rate has been decreasing since its two-decade high of 54.1% in December 2022. Businesses and the opposition have blamed the government for the high inflation, high cost of doing business, and fluctuating local currency. The government is seeking a $3 billion bailout from the IMF to turn around the economy.

According to Andrew Harker, Economics Director at S&P Global Market Intelligence, the sustained softening of inflation has provided scope for firms to secure greater new order volumes and the confidence to commit to raising employment and purchasing activity. He also predicted that if inflation continues to trend downward, the Ghanaian economy will likely witness a sustained recovery in the coming months.

For the most part, Ghana’s private sector is showing signs of improvement, with a sustained softening of inflation and increased customer demand leading to higher business activity. Firms are expanding their employment and purchasing activities to meet the growing demand, and the S&P Global Ghana Purchasing Managers’ Index has shown modest improvement in the health of the private sector since December 2021.

Despite these positive signals, the Ghanaian economy has been facing difficulties, with high inflation, high cost of doing business, and fluctuating local currency. The government is seeking a $3 billion bailout from the IMF to turn around the economy. Andrew Harker, Economics Director at S&P Global Market Intelligence, predicted that the recovery will be sustained if inflation continues to trend downward.

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