Ghana flag Ghana: Economic outline

Economic Outline

Economic Indicators

Ghana was consistently placed among Africa’s ten fastest-growing economies before the economic recession induced by falling oil prices and the Covid-19 pandemic. In 2022, Ghana's economy faced a severe macroeconomic crisis due to existing imbalances and external shocks. The country's significant financing requirements and tightening financial conditions worsened concerns about debt sustainability. Capital outflows, coupled with tighter monetary policies in advanced economies, intensified pressure on the exchange rate. Additionally, monetary funding of the budget deficit led to high inflation rates. These factors disrupted the post-COVID-19 recovery, causing GDP growth to drop from 5.1% in 2021 to 3.1% in 2022. During the first half of 2023, GDP growth recovered to 3.2%, driven by robust expansion in services (6.3%) and agriculture (6.2%), while the industrial sector experienced a contraction of 2.2%. Due to a worse performance in the second part of the year, the IMF estimated the overall growth at only 1.2%. Nevertheless, the economy is expected to pick up this year (+2.7%) and in 2025 when growth should accelerate to 4.6%.

The deterioration of public finances, debt unsustainability, currency depreciation, and rampant inflation led Ghana to seek assistance from the IMF in July 2022. An Extended Credit Facility (ECF) of USD 3 billion over three years was granted to Ghana in May 2023, along with a rigorous reform program. Ghana has adopted a two-pronged approach to debt restructuring, completing a domestic debt exchange plan (DDEP) covering 47% of its public debt locally by September 2023, while suspending payment of external debt service (53% of public debt), including Eurobonds, commercial loans, and bilateral loans. This suspension is concurrent with negotiations within the G20 Common Framework led by the Paris Club. According to the recently passed 2024 Budget, the budget deficit is projected to reach 4.8% in 2024 (compared to -5% according to the IMF), down from 7.5% in 2023. In the medium term, the Government aims to achieve a budget deficit below 3% of GDP by 2027 (3.1% according to IMF estimates). Meanwhile, the debt-to-GDP ratio decreased to 84.9% in 2023 (from 92.4% one year earlier) and is expected to follow a downward trend, reaching 78.8% by 2025 (IMF). Inflation, which has been driven by food prices, remained elevated above 40% in 2023 but should gradually moderate to 23.2% this year and 11.5% in 2025.

Ghanaian households have faced challenges due to high inflation and a decelerating economy. Projections by the World Bank indicate that poverty will worsen by 2025, with the rate rising to almost 34% (according to the international poverty line), up from 27% in 2022. This trend aligns with a subdued growth outlook in services and agriculture and escalating prices. Despite significant inflation, the country's minimum wage has only risen by 10%, which is deemed inadequate considering the inflation rate. According to World Bank estimates, the unemployment rate in the country was around 3.5% in 2022 (latest data available).

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 72.2476.6375.6576.7181.79
GDP (Constant Prices, Annual % Change) 3.11.22.74.64.9
GDP per Capita (USD) 2,2522,3292,2422,2172,305
General Government Gross Debt (in % of GDP) 92.484.981.578.875.8
Inflation Rate (%) n/a42.223.211.58.0
Current Account (billions USD) -1.52-1.91-2.11-2.30-2.74
Current Account (in % of GDP) -2.1-2.5-2.8-3.0-3.3

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
American Dollar (USD) - Average Annual Exchange Rate For 1 GHS 0.250.230.220.190.18

Source: World Bank, 2015

 

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Latest Update: March 2024