Ghana's GDP Growth Slows to 5.5% in Q3 2025
Ghana’s economy grew by 5.5% in the third quarter of 2025, but the Institute for Economic Research, Public and Policy (IERPP) warns this headline figure hides worrying signs of weakening economic foundations and increasing vulnerabilities.
In a recently released position paper, the IERPP, led by Prof. Isaac Boadi of the University of Professional Studies, Accra (UPSA), argues that while the economy appears to be expanding, underlying momentum is slowing. This deceleration is evident across several key sectors and exposes Ghana to greater external and domestic risks.
The 5.5% growth in Q3 2025 represents a decline from the 7.0% recorded in the same period in 2024. Seasonally adjusted quarterly growth also decreased, moving from 1.6% to 1.3%, a signal, according to the IERPP, of diminishing economic activity.
Perhaps more concerning is the slowdown in the non-oil sector, which dropped from 7.8% to 6.8%. This indicates the economic deceleration isn’t isolated to the extractive industries.
The GDP deflator experienced a significant fall, from 27.2% to 11.1%. This suggests that previous nominal gains were largely driven by inflation, rather than genuine improvements in productivity.
The industrial sector saw the most dramatic slowdown, plummeting from 11.4% growth last year to just 0.8% in Q3 2025. A contraction of 2.8% in mining and quarrying, coupled with an 18.2% decline in oil and gas, collectively erased almost a full percentage point from the overall GDP growth.
These developments, the report warns, highlight Ghana’s susceptibility to fluctuations in commodity prices, operational challenges, and external shocks.
The services sector continues to be the primary driver of national output, contributing approximately 3.25 percentage points to the 5.5% overall growth. However, the IERPP points out that this expansion is concentrated in a few fast-growing subsectors – Trade (10%), ICT (17%), and Transport and Storage (10.4%).
Meanwhile, labour-intensive services like Health and Social Work (-9.7%) and Accommodation and Food Services (-7.2%) are shrinking, which the institute says undermines job creation and limits inclusive growth.
Agriculture expanded by 8.6% in the quarter, contributing 1.65 percentage points to total GDP. However, the IERPP cautions that the sector’s reliance on seasonal patterns and weather conditions restricts its ability to provide long-term economic stability.
The paper also raises concerns about volatility in economic activity indicators, citing significant shifts in the Monthly Index of Economic Activity – for example, a jump from 3.7% to 5.7% in July – as raising questions about the reliability of current estimates.
According to the IERPP, the evidence suggests an economy that is growing, but with diminishing momentum and increasing structural imbalances.
To address these emerging risks, the institute is advocating for targeted reforms to bolster resilience and diversify the sources of growth. These include focusing on manufacturing, agro-processing, and MSMEs, expanding participation in the digital economy, managing oil revenue volatility through improved fiscal buffers and contingency planning, and enhancing data credibility by harmonizing the Monthly Index of Economic Activity and quarterly national accounts, and incorporating confidence intervals.
Summarizing the institute’s findings, Prof. Boadi emphasized that the current growth trajectory is unsustainable without substantial reforms. “Ghana’s Q3 2025 GDP shows growth that is slowing and structurally fragile, driven mainly by a narrow set of service activities while oil and gas continue to weigh down industry,” he stated.
He added that building a resilient and diversified economy requires focused industrial reforms, support for job-rich sectors, improved data accuracy, and proactive management of risks associated with the extractive sector. The IERPP is urging the government and policymakers to view the latest GDP figures as a warning and to act decisively to safeguard Ghana’s medium-term economic prospects.
Image Source: MYJOYONLINE
