Ato Forson Predicts Inflation Will Stay Below 5% Despite Middle East Crisis

Finance Minister Dr. Cassiel Ato Forson has expressed confidence that Ghana’s inflation rate will remain below 5% by the end of 2026, despite growing geopolitical tensions in the Middle East and their potential impact on global energy and commodity markets.

His optimism comes after Ghana’s disinflation trend experienced a slight setback in April, when headline inflation rose marginally to 3.4% from 3.2% in March. The increase marked the first uptick after 15 consecutive months of declining inflation.

Even with the recent rise, Ghana’s inflation remains well within the Bank of Ghana’s medium-term target range of 8%, plus or minus two percentage points.

Speaking in an interview with Bloomberg, Dr. Forson acknowledged that the ongoing conflict in the Middle East poses risks to Ghana’s inflation outlook, particularly through possible increases in fuel and fertilizer prices as well as disruptions to global supply chains.

“The conflict poses challenges in terms of petroleum product prices and, most importantly, fertiliser costs and supply chains. Availability is not a concern at the moment; the challenge is the potential increase in prices,” he explained.

Despite these concerns, the Finance Minister maintained that Ghana is well-positioned to withstand external shocks due to its strong foreign exchange reserves, increasing gold production and favourable commodity market conditions.

“The good news is that Ghana does not subsidise petroleum products. We have also built significant reserves,” Dr. Forson stated.

According to him, the country’s reserve buffers, coupled with higher gold exports and elevated gold prices, provide a strong cushion to meet foreign exchange demands for critical imports.

“Our gold production is increasing and gold prices remain high. Ghana is therefore in a comfortable position to absorb these shocks,” he added.

Dr. Forson, however, admitted that inflation could face some upward pressure in the coming months as a result of global developments.

“We may see a bit of pressure on inflation. It currently stands at about 3.4%, but I still believe we will be better off, and I do not expect inflation to exceed 5% by the end of the year,” he said.

The Finance Minister also pointed to improving performance in Ghana’s export sector as a key factor supporting the country’s inflation outlook.

“Our major exports are performing strongly. While cocoa production declined, cocoa prices have started rising again. We are also an oil-exporting country, which means we continue to earn foreign exchange from the sector,” he noted.

Dr. Forson’s remarks come as the Bank of Ghana adopts a more cautious monetary policy stance. Last month, the central bank maintained its policy rate at 14% following a series of earlier rate cuts, citing inflationary risks associated with the Middle East conflict and rising global crude oil prices.

The Bank warned that higher energy costs and supply chain disruptions could threaten the recent gains made in stabilising prices, underscoring the need for continued vigilance in managing inflationary pressures.