By:Kenneth Appiah Bani
Fitch Solutions has cautioned that a significant drop in global gold prices, potentially triggered by a shift towards more traditional trade policies in the United States or the resolution of key geopolitical tensions, could have serious consequences for Ghana’s economy.
According to the UK-based research firm, such a scenario would erode Ghana’s international reserves, putting pressure on the Bank of Ghana’s ability to maintain the current stability of the cedi. This could lead to renewed currency depreciation.
“If gold prices fall sharply, the Bank of Ghana may struggle to support the cedi, which could result in a renewed sell-off,” Fitch noted. “This would keep inflation elevated, reduce consumer and investor confidence, and force the central bank to maintain higher interest rates for an extended period.”
This analysis formed part of Fitch Solutions’ downside risk outlook for Ghana’s economy.
On the upside, Fitch highlighted that any further appreciation of the cedi would accelerate the disinflation process beyond current expectations. A stronger cedi would ease the burden on consumers and encourage spending.
“In such a case, inflation would fall more quickly, supporting private consumption and allowing the Bank of Ghana to ease monetary policy sooner,” the report said. “This could boost credit uptake and support broader economic activity.”
Fitch also projected that government consumption will make a negative contribution to economic growth in 2025. This, it explained, stems from the government’s commitment to fiscal consolidation under the International Monetary Fund (IMF) programme.
Despite a tighter fiscal outlook, the report suggests that elevated gold prices and a stronger cedi could ease pressure on households. This would support consumer spending in the coming quarters by reducing inflation and improving purchasing power.
Fitch Solutions has outlined both risks and opportunities for Ghana’s economy, depending largely on global gold price trends and cedi performance. While falling gold prices pose threats to reserves and inflation control, a stable or strengthening cedi could ease inflation and boost household consumption.
