Ghana sits on the Atlantic Ocean and borders Togo, Cote d'Ivoire, and Burkina Faso. It has a population of about 29.6 million (2018). In the past two decades, it has taken major strides toward democracy under a multi-party system, with its independent judiciary winning public trust. Ghana consistently ranks in the top three countries in Africa for freedom of speech and press freedom, with strong broadcast media, and radio the medium with the greatest reach. Factors such as these provide Ghana with solid social capital.
Twenty-six months after being elected president in a peaceful election, President Akuffo-Addo has had some successes, but he also faces challenges, fulfilling his election pledges—including setting up a factory in each of the nation’s 216 districts, one dam for every village and providing free high school education. Though the government is implementing some of its promises, such as planting for food and for jobs, and free secondary education.
Recent Economic Developments and Outlook
Recent Developments Ghana’s economy accelerated to 8%1 in 2017, driven by the mining and oil sectors, making it the second-fastest growing African economy, trailing only Ethiopia. In addition to the impact of the oil sector, gold output was high, while cocoa production levels remained stable. In 2018, Ghana’s economy continued to expand rapidly, albeit at a slower pace than the rate in 2017. Quarterly gross domestic product (GDP) growth was estimated at 5.4% in the first quarter of 2018; and 5.4% in the second quarter. The full-year real GDP growth projection was revised from 6.8% to 5.6% due to the larger base for 2017 because of the rebasing exercise conducted in October 2018. This is significantly below the 2017 growth rate of 8.1%.
Ghana’s growth target for 2019 is 7.4% mainly to be driven by the industry sector, especially oil, gas
Ghana’s fiscal performance has shown a broad turnaround in the past 24 months. The fiscal deficit narrowed to 5.9% of GDP in 2017 from 9.3% in 2016 mostly represented by expenditure measures as revenues remained weak. The government continued with the fiscal consolidation efforts in 2018 despite difficulties on the revenue side. Ghana’s fiscal deficit for the period January-September 2018 was 3% of GDP, just above the target of 2.6%. The primary balance at the end of September 2018 was a surplus of 0.5% of GDP compared to the target of a surplus of 0.9%. The end 2018 data is expected to show a generally lower expenditure as a response to the revenue shortfall and 2018 fiscal deficit is projected to reach 3.7% of GDP.
The inflation rate has stabilized to levels within the central bank’s target range of 6-10%. Headline inflation fell from close to 20% in 2016 to 9.6% in July 2018. This decline was driven by moderations in both food and non-food inflation, the relative stability of the cedi as well as the ongoing fiscal consolidation. The moderation in inflation created room for policy easing since July 2017, as the policy rate was cut from 21.5 in January 2017 to 20% in September 2017 and is at 16% in January 2019.
On the external sector, the current account registered a smaller deficit of 1.4% of GDP in September 2018 compared with 2% a year ago; and Gross International Reserves of $6.8 billion (3.9 months of imports). The current account deficit is expected to continue its narrowing trend and is projected to reach 3.2% of GDP for
Outlook: Ghana’s growth target for 2019 is 7.4% mainly to be driven by the industry sector, especially oil, gas
Last Updated: Mar 25, 2019