EM Advisory Applauds Mahama Administration’s Economic Turnaround, But Warns of Fragile Foundations.
A mid-year economic review released by Emerging Markets Advisory, has delivered a balanced yet striking assessment of Ghana’s current economic trajectory, describing the first six months of President John Mahama’s administration as a “near-perfect turnaround.”
The report lauds a string of impressive macroeconomic gains that have significantly improved sentiment among investors, markets, and citizens.
However, it also issues a sober reminder that these achievements rest on delicate foundations that require urgent policy attention to ensure they endure beyond the short term.
The report’s opening highlights the headline numbers that have captured both domestic and international attention: a 10.1 percentage point drop in inflation within just six months, a remarkable 42.6% appreciation of the cedi against the US dollar, and a robust GDP growth rate of 5.3% in the first quarter of the year, the fastest pace since 2020.
EM Advisory characterizes these gains as evidence of “significant macroeconomic improvement,” noting that Ghana’s recent performance has outpaced many of its frontier emerging market peers.
Yet, beneath the upbeat data lies a recurring theme in the report; ‘sustainability’. EM Advisory’s analysts caution that the current disinflation trend and currency rally may be fueled by temporary, rather than structural, factors.
Among these are a surge in gold exports, buoyed by record-high gold prices, and strategic interventions by the Bank of Ghana in the currency markets. While these have been effective in the short run, they do not, in themselves, represent deep-seated reforms capable of insulating the economy from future shocks.
The report underscores that Ghana’s currency appreciation, while a strong signal of stability to investors, must be handled with care. A rapid and steep appreciation can attract foreign capital inflows and strengthen market confidence, but without a diversified export base, it risks creating an overdependence on a single commodity, in this case, gold.
EM Advisory stresses that similar frontier markets observing Ghana’s experience should draw lessons from this, recognizing that quick wins in macroeconomic stability, while politically attractive, must be paired with long-term policy measures aimed at building resilience.
The analysis drills down into sector-specific performance, revealing a 6.6% combined growth rate in agriculture and manufacturing. This expansion has been a key contributor to GDP growth, suggesting that the recovery is not entirely commodity-led.
However, the report questions whether the agricultural gains are the result of sustained productivity improvements, modernization, and structural reforms, or merely a fortunate convergence of favorable weather conditions and high commodity prices.
This distinction, EM Advisory warns, will be critical in determining whether the sector can maintain its upward trajectory.
On the fiscal front, the Mahama administration earns commendation for achieving a primary surplus equivalent to 1.1% of GDP, a rare feat in recent Ghanaian economic history.
Such discipline, the report notes, signals a welcome shift towards prudent budgeting and debt management. Yet, the fiscal story is not without blemishes. EM Advisory points to a GH¢1.3 billion overshoot on the public sector wage bill and a significant gap in the reported arrears figures, which raises concerns over fiscal transparency and data accuracy.
These lapses, while not catastrophic, undermine the credibility of Ghana’s fiscal consolidation narrative.
The report also delves into the political economy of fiscal management, warning that sustaining discipline will be the real test for the Mahama government. In many frontier economies, the initial “honeymoon period” after a change in government allows for unpopular but necessary austerity measures.
However, as election cycles progress, political pressures tend to push administrations towards higher spending, often eroding early gains. The EM Advisory review cautions that Ghana is not immune to this dynamic, particularly as “pent-up expectations” among citizens, public sector unions, and political allies begin to mount.
Ultimately, EM Advisory frames Ghana’s recovery as a time-sensitive opportunity rather than a permanent fix. The Mahama administration, it says, has “bought time” through effective short-term stabilization measures, but “time alone will not solve Ghana’s problems.”
To convert current momentum into lasting stability, the report recommends a series of structural interventions, including the establishment of a robust Sinking Fund to manage external debt repayments, a stronger commitment to evidence-based policymaking, and a focused strategy to diversify the export base while reducing import dependence.
The closing message of the report is both a commendation and a challenge: Ghana’s economic rebound is real, measurable, and worthy of recognition, but it remains vulnerable.
Without deep reforms to tackle chronic weaknesses such as export concentration, fiscal leakages, and the persistent boom-bust cycle, today’s gains could quickly become tomorrow’s lost opportunity.
By Prince Ahenkorah
