By Daniel Bampoe
The World Bank has painted a sobering picture of Ghana’s private sector, warning that business sentiment remains in the contractionary zone despite some signs of recovery.
In its latest Africa Pulse Report for October 2025, the Bank acknowledged that while the economic environment is gradually improving, business confidence has yet to fully rebound.
According to the report, the Purchasing Managers Index (PMI) — a key measure of private sector performance — edged up slightly from 50.2 in July 2025 to 50.8 in August.
The improvement, though marginal, was driven by new business orders and sustained job creation.
A PMI above 50.0 generally indicates expansion, while a figure below 50.0 suggests contraction.
However, the World Bank cautioned that the recovery remains fragile.
“Unusually poor weather conditions led to a modest decline in output,” the report noted, adding that firms were nonetheless optimistic about future prospects.
The Bank attributed the moderate uptick in business activity to reduced input costs, lower output prices, and a stronger cedi that has helped ease inflationary pressures.
Consumer inflation in Ghana has seen a remarkable decline, falling to 12.1% year-on-year in July 2025, down from a staggering 23.8% in December 2024.
This sustained disinflation, now in its seventh consecutive month, has given both businesses and consumers some breathing room.
Yet, despite these gains, many Ghanaian firms are still operating below pre-crisis levels.
Persistent challenges — including weak domestic demand, limited access to credit, and the lingering effects of the country’s 2022-2023 debt crisis — continue to weigh on private sector confidence.
The World Bank’s findings also reflect broader trends across sub-Saharan Africa.
It reported that business activity in both manufacturing and services sectors across the continent continued to expand in August, though at a slower pace compared to the first half of the year.
The report cited robust domestic demand and easing inflation as key factors supporting growth.
Nonetheless, the Bank observed a mixed pattern across the region.
While business sentiment continues to expand in countries such as Nigeria and Uganda, it has only recently bounced back from contraction in Mozambique, South Africa, and Zambia.
In contrast, Ghana and Kenya remain stuck in contractionary territory, suggesting that structural economic weaknesses and policy uncertainties persist.
Export-driven economies, the report added, are currently facing shifting trade dynamics as global markets adjust to new tariffs and fluctuating demand.
This has affected the pace of recovery in several African countries that rely heavily on commodity exports, including Ghana.
