Fitch Solutions has warned that a sharp drop in global gold prices could swiftly erode Ghana’s international reserves and trigger fresh pressure on the local currency.
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The UK-based research firm noted that a return to traditional trade policies in the U.S. or the resolution of major geopolitical tensions could drive gold prices down significantly. In that case, Ghana’s central bank may struggle to stabilize the cedi, potentially leading to renewed market sell-offs.
“This would keep inflation elevated, weaken consumer and investor confidence, and force the central bank to maintain high interest rates for a longer period,” Fitch stated in its downside risk outlook.
Upside Scenario: Stronger Cedi, Lower Inflation
On the other hand, Fitch sees a stronger cedi as a path to quicker disinflation. Lower inflation would boost private consumption and could prompt the Bank of Ghana to cut interest rates sooner than projected, stimulating credit growth and supporting economic recovery.
Government Spending to Decline in 2025
The report also projected that government consumption will contract in 2025, as the administration enforces tighter spending under its IMF-supported fiscal consolidation plan.
Private Consumption Outlook
Fitch expects elevated gold prices and a resilient exchange rate to ease inflationary pressure. This would reduce the burden on household budgets and drive a modest rebound in consumer spending over the coming quarters.
