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 months after being elected president in a peaceful election, President Akufo-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
Ghana’s economy accelerated to 8.5% in 2017 making it the second-fastest growing African economy, trailing only Ethiopia. The year was off to a strong start; growth for the first quarter of 2018 was 6.8%, above 6.7% recorded in 2017 primarily driven by the continued expansion of oil production. The non-oil growth domestic product (GDP) growth was 5.4%, compared to 4.0% in first quarter 2017. The industry sector recorded the highest growth of 9.6% driven by oil, although this was lower than the 11.8% growth in 2017. The services sector grew by 5.2%, higher than the 3.3% recorded in the same period in 2017 and driven by the information and communication sub-sector. However, the agriculture sector growth of 2.8%, driven by livestock, was much slower than the 8.4% recorded in the same period in 2017.
Ghana’s fiscal performance has shown a broad turnaround in the past 18 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 fiscal deficit at the end of first half 2018 was on track with 2.7% of GDP compared to the target of 2.8%, still with difficulties in revenue mobilization.
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 17% in September 2018.
Growth for 2018 is expected to moderate to as one-off effects of oil production from new wells fade. Real GDP is projected to grow by 6.5% in 2018 and will remain around this level through 2020.
Last Updated: Oct 10, 2018