Prolong Middle East tensions could hurt Ghana’s economy – World Bank warns

The World Bank has cautioned that prolonged tensions in the Middle East could adversely impact Ghana's economy. While the country's status as an oil producer and major gold exporter offers some protection, disruptions to global trade from the conflict could undermine macro-financial stability, according to the Bretton Woods institution.

This was highlighted in the World Bank's latest Ghana Economic Update Report, which outlines a "Reset for Growth: Sustaining Macroeconomic Recovery and Unlocking Transport for Transformation" strategy. The report projects Ghana will achieve a 4.8% growth rate in 2025, with medium-term growth potential converging toward around 5%.

However, inflation is expected to stay within the Bank of Ghana's target band of 8±2%. The Bank emphasized that while these projections are attainable, they are not guaranteed, and significant downside risks exist. The Middle East conflict's impact, including gold price volatility, geoeconomic fragmentation, and elevated energy, food, and agricultural input costs, are the primary concerns.

Policy slippages in the energy and cocoa sectors, combined with fiscal pressures from extended temporary relief measures like fuel price interventions, could erode recent macroeconomic gains and pose downsizing risks to debt sustainability goals. The Bank warned that increasing debt service payments in 2027-2028 could create rollover risks due to the reliance on short-term debt instruments.

However, the reopening of the domestic bond market since April 2026 is anticipated to alleviate some financing pressures. The World Bank recommends revenue-led fiscal consolidation, emphasizing the importance of broadening the tax base, improving compliance, and establishing a robust tax administration system. Additionally, the Bank stresses the need for expenditure quality improvements, including amendments to key financial management and procurement laws to strengthen commitment controls.

It also urges prioritizing high-return public investments, preserving critical social spending, and enhancing PFM efficiency to ensure that fiscal discipline and growth-supportive expenditure work in harmony rather than at odds.