Ghana’s economic growth decelerated to two percent year-on-year in the third quarter from 2.7 percent a year earlier, broadly in line with expectations as fiscal tightening and high interest rates to tame inflation took a toll.

However, analysts still believe the economy remains on track to achieve the government’s recently upgraded full-year growth target of 2.3 percent for 2023.

“While lingering headwinds will continue to pose a risk in the fourth quarter, we think the annual expansion will come in slightly above the upwardly revised 2.3 percent goal set by authorities,” Apakan Securities said in a research note reviewing the latest GDP figures from the statistics office.

The central bank’s composite index of economic activity indicates a steady recovery in business conditions in recent months, rebounding sharply from a 7.6 percent contraction in January to 0.4 percent growth by September.

“Coupled with the usual festive season pick-up, this points to potential for faster growth in the fourth quarter and an above-target out-turn for the full year,” Apakan added.

The 2 percent third quarter figure brings the year-to-date average expansion to 2.8 percent, still below the 2023 target.

According to the GSS report, Ghana’s provisional non-oil real GDP also eased to 2.7 percent year-on-year in Q3 2023, compared to 3.3 percent in Q3 2022. The GSS figures show Ghana’s real quarterly GDP, including the oil and gas sector, reached GH¢44.74billion in Q3 2023, up from GH¢43.87billion in Q3 2022.

Non-oil real GDP also rose to approximately GH¢41.91billion in Q3 2023, from GH¢41.06billion in Q3 2022.

On a sectoral basis, agriculture exhibited robust 5.9 percent growth year-on-year, followed by the services sector which expanded 5.5 percent. The industry sector contracted 4.3 percent over the same period.

Within sectors, services remained resilient with broad-based 5.5 percent growth led by professional services, transport, real estate and healthcare.

Agriculture slowed a bit, but still grew a solid 5.9 percent as crops and livestock outperformed, offsetting a surprise contraction in cocoa output and continued struggles in forestry.

Industry extended its declines, dropping 4.3 percent on the quarter – its fourth straight contraction. Construction saw a sharp 8.3 percent plunge while mining and electricity also dragged on performance.

The weak industrial numbers underscore the impact of authorities’ inflation-fighting efforts, which have included spending cuts and 10 percentage points worth of interest rate hikes since early 2022.

Headline inflation hit a 21-year peak in October, prompting policy-makers to promise continued tightening to return it to the official target band.