Building capacity to help Africa trade better




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Key Facts

  • Capital: Accra
  • Region: West Africa
  • Official language: English
  • Independence Day: March 06, 1957
  • Area: 239,460 sq km
  • Population (2018): 29.8 million
  • REC membership: CEN-SAD, ECOWAS
  • WTO membership: January 1, 1995
  • GDP (2018): US$ 65.556 billion
  • GNI per capita (2018): US$ 2 130
  • Currency: Ghanaian cedi

Economic overview

Ghana’s economy continued to expand in 2019, with real GDP growth estimated at 7.1%. High growth momentum since 2017 has consistently placed Ghana among Africa’s 10 fastest-growing economies. Improvements in the macroeconomic environment were accompanied by expansion in domestic demand due to increased private consumption. The industrial sector, with average annual growth exceeding 10%, was a major driver of growth in the three years to 2019.

Agriculture will continue to be the second fastest-growing sector in the economy, but a financial sector clean-up that started in 2017 placed a temporary drag on growth of services. In 2019, Ghana maintained its moderate fiscal and current account deficits, single-digit inflation, and a relatively stable exchange rate. The fiscal deficit improved from 3.5% of GDP in 2018 to 3.4% in 2019. However, the current account deficit rose from 3.1% of GDP to 3.5% as net flows in the income account outweighed gains in the trade account. A steady decline in nonfood inflation and tight monetary policy helped keep inflation within a medium-term target of 8 ± 2%.

The exchange rate between the Ghana cedi and US dollar remained stable with volatility reflecting seasonal import-driven demand. Increased public debt and shortfalls in domestic revenues pose challenges to further macroeconomic improvements. By September 2019, the debt-to-GDP ratio rose 3.2 percentage points year-on-year, mainly due to a $3 billion eurobond issue and to domestic borrowing, including a $2 billion financial sector bailout. Despite the low domestic resource mobilization and high cost of financial and energy sector reforms, the government remains committed to a deficit ceiling of no more than 5% of GDP, as required by the new Fiscal Responsibility Act.

Growth prospects remain positive, with increased output and stable global prices for Ghana’s main export commodities. Domestic initiatives aim to increase productivity and boost output in key primary sectors and value chains. The 10-Point Industrialization Agenda seeks to expand output through coordinated public and private investment. Programs targeting higher agricultural productivity include Planting for Food and Jobs, Rearing for Food and Jobs, and Planting for Export and Rural Development. The nascent manufacturing sector will broaden the basis for growth, focusing on agriculture-led industrialization.

Exports are largely unprocessed, and more than 18% of imports are food items – both opportunities for local value addition. Foreign direct investment (FDI) and portfolio investments provide low-cost capital for emerging value chains. As West Africa’s top FDI recipient, Ghana received more than a third of the region’s inflows in 2018, reflecting the country’s emerging skill base. The government’s new Business Regulatory Reform program is expected to improve the business environment and mobilize domestic revenue. Digital investments, especially in the financial sector, will increase efficiency.

With the African Continental Free Trade Agreement, Ghana’s industry will absorb increasing raw materials from the region, scale up manufacturing, and trade in processed and light manufactured products. Despite the Fiscal Responsibility Act, the run-up to elections might put pressures on the government to overspend and undertax which could derail progress toward fiscal consolidation. Mounting energy sector liabilities, due to excess installed capacity from take-or-pay contracts with independent power producers, and the ongoing financial sector clean-up are likely to lift the debt-to-GDP ratio above the current 60.6%. Increased foreign participation in Ghana’s debt exposes the country to global market swings and foreign exchange risks, with nonresident participation in domestic debt at more than one-third.

Last updated: April 2020


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