Rapid price increases have led to a decline in private sector activity as measured by the S&P Global Purchasing Manager’s Index (PMI). The country recorded a PMI of 49.7 in June compared to 51.6 in May; any PMI recording of less than 50 suggests a decrease in activity levels compared to the previous month. June’s PMI ends a run of four consecutive months of expanded business activity,

The PMI is a weighted average of five indices – New Orders, Output, Employment, Supplier’s Delivery Times, and Stocks of Purchase tracked by S&P Global across several countries. Strong inflation partly caused by a 22% depreciation in the Ghana Cedi against the US dollar contributed to output remaining unchanged from the previous month. A 19-month high increase in purchase prices led to an increase in selling prices by producers. On the positive side employment numbers increased for a fifth straight month despite an increase in staff costs.

Ghana’s GDP increased by 4.7% in Q1 2024 on the back of robust growth in ICT and Mining. The country has reached an official MOU with bilateral creditors to restructure $5.4 billion in bilateral debt and an Agreement in Principle (AIP) to restructure $13.1 billion in commercial debt. A closure of market access, sharp currency depreciation, and the highest inflation in a generation drove the country to seek a $3 billion IMF programme in 2022.

A continued recording of declining private sector activity would reduce optimism that the country’s economy is recovering. This will increase pressure on a government which has promised to remain committed to an IMF-backed austerity programme despite facing a general election in December.