Fitch Solutions has warned that a sharp decline in global gold prices—driven by a shift toward conventional trade policies in the U.S. or the resolution of major geopolitical tensions—could significantly erode Ghana’s international reserves.
According to the UK-based research firm, such a scenario would leave the Bank of Ghana struggling to maintain the value of the cedi, resulting in renewed pressure on the local currency.
“This would keep inflation elevated, lead to a weakening in consumer and investor sentiment, and prompt the central bank to keep interest rates higher for longer,” the report stated, outlining its downside risk forecast.
However, on the upside, Fitch noted that a further appreciation of the cedi could lead to quicker disinflation than currently projected. This would bolster private consumption and potentially allow the Bank of Ghana to ease its monetary policy stance more rapidly, thereby stimulating credit growth.
Government Consumption to Remain Subdued
Fitch also projected that government consumption would contribute negatively to Ghana’s economic growth in 2025. This is attributed to continued fiscal consolidation measures under Ghana’s programme with the International Monetary Fund (IMF).
Private Consumption Outlook
The report expressed optimism about private consumption, noting that a stronger exchange rate supported by elevated gold prices would aid disinflation, ease household budget constraints, and support consumer spending in the coming quarters.