Ghana recorded the weakest private sector performance among eight major African economies at the start of 2026, with business activity slipping to a 12-month low and falling behind South Africa, according to a BusinessDay analysis of the latest Purchasing Managers’ Index (PMI) survey released by S&P Global on Wednesday.
The PMI fell to 48.5 in January from 51.1 in December, marking the first contraction in four months and signalling a modest deterioration in operating conditions. Readings below the 50-point threshold indicate contraction, while values above 50 signal expansion.
In December, Africa’s biggest economy, South Africa, recorded the weakest business activity reading at 47.7 but rebounded to 50.0 in January—its first return to expansion since September.
“Companies in Ghana experienced a slow start to the year, as signalled by renewed falls in both new orders and business activity in January,” the index report said. “On a more positive note, confidence for the coming year improved to a six-month high, and employment continued to rise.”
The survey also highlighted a further reduction in selling prices, supported by an appreciation of the cedi against the US dollar toward the end of 2025, which helped lower firms’ input costs.
Business sentiment strengthened despite the contraction, with about 84 percent of respondents optimistic about the year ahead. The improved outlook encouraged firms to continue hiring, pointing to a potential rebound in activity in coming months.
Further analysis shows that among the eight African economies tracked, Egypt, Ghana, and Nigeria were the only countries to record PMI readings below 50 in January. Uganda posted the strongest expansion, followed by Kenya, while Mozambique, Zambia, and South Africa registered marginal growth around the neutral 50 mark.
The continent biggest gold producer’s PMI is compiled from responses by roughly 400 private-sector companies across sectors and firm sizes, weighted by their contribution to gross domestic product. The index combines measures of new orders, output, employment, suppliers’ delivery times, and stocks of purchases.
Survey data showed new orders declining for the first time in 12 months, triggering a renewed drop in output after a brief rise in the previous period. The pace of decline was the sharpest since January 2025, underscoring lingering fragility in the recovery.
Disinflation and policy easing
The soft business activity comes even as Ghana’s macroeconomic backdrop improves markedly.
Inflation has slowed sharply from peaks above 54 percent in late 2022 during the country’s balance-of-payments and currency crisis, falling steadily through 2025 and easing to 3.8 percent last month—firmly within the central bank’s six–eight percent target band.
The cedi has also staged a historic recovery, recording its first annual gain against the US dollar in decades, supported by elevated gold prices, improved reserves, and broad dollar weakness.
According to Andrew Harker, economics director at S&P Global Market Intelligence, the stronger currency reduced purchase costs in January, allowing firms to continue lowering selling prices and easing inflationary pressures across the private sector.
“The ongoing lack of inflationary pressure illustrates why the Bank of Ghana has been able to reduce interest rates markedly at recent meetings,” he said.
Last week, during the first Monetary Policy Committee for the year, the Bank of Ghana cut its benchmark policy rate by 250 basis points to 15.5 percent—its lowest level since February 2022 and below most economists’ expectations—extending one of Africa’s most aggressive easing cycles.
The policy rate had already been reduced by 1,000 basis points from 27 percent to 18 percent between January and November last year.
The country’s central bank governor, Johnson Asiama, said the MPC judged that tighter past policy, fiscal consolidation, and a significant build-up in foreign reserves had strengthened underlying conditions sufficiently to justify further easing.
He added that inflation is expected to remain broadly within the target band in the first half of the year, while economic growth should stay resilient through 2026.
Fragile recovery signal
January’s PMI contraction highlights the uneven nature of Ghana’s recovery: macroeconomic stabilisation is advancing rapidly, yet private-sector demand remains subdued.
The divergence suggests that while policy easing and currency strength are improving fundamentals, a sustained rebound in business activity will depend on firmer domestic demand and continued confidence gains in the months ahead.
