Ghana flag Ghana: Economic and Political Overview

The economic context of Ghana

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Ghana was consistently placed among Africa’s ten fastest-growing economies since 2017, but in 2020, falling oil prices and the Covid-19 pandemic outbreak plunged the country into economic recession. According to IMF estimates, GDP growth decreased from 6.5% in 2019 to 0.4% in 2020. Supported by a strong cocoa season and mining and services activity, economic growth rebounded to 4.7% in 2021, and is expected to further accelerate to 6.2% in 2022 before slowing down to 4.7% in 2023. Lower oil production level, the emergence of new Covid-19 variants and increasing pressure on debt levels amid the loss of access to international financial markets are the major risks identified by Focus Economics.

Ghana was hit hard by the Covid-19 pandemic and the collapse in export revenues from oil and cocoa. The government put in place a support plan, the Coronavirus Alleviation Programme, worth 3% of GDP (Coface), which helped contain the effects of the pandemic but deteriorated public finances. The economic outlook improved in 2021 as activity started to recover, but the country’s public accounts remained under pressure. Public debt continued to rise, from an estimated 78.9% GDP in 2020 to 83.5% GDP in 2021, and is forecast to further soar to 84.9% GDP in 2022 and 86.4% GDP in 2023 (IMF). Ghana is classified at high risk of debt distress. In January 2022, Fitch Ratings degraded Ghana’s sovereign credit ratings. The debt is driven in part by exceptional energy and financial sector costs. Indeed, government arrears to the energy sector represent 1% of GDP each year (Coface). Debt interests payment weights heavily on the fiscal deficit, which amounted to an estimated -13.9% GDP in 2021 (down from -15.2% GDP in 2020) (IMF). Higher tax revenue and external demand for oil, gold and cocoa should help narrow the fiscal deficit to -10.5% GDP in 2022. The partial monetisation of the deficit fuelled inflation, which reached an estimated 9.9% in 2020 (IMF). As food prices spiked, inflation remained high in 2021 (9.3%) and is expected to slightly decrease to 8.8% in 2022 and 8% in 2023 (IMF). To revive the economy and attract investment, the authorities have adopted the COVID-19 Alleviation and Revitalisation of Enterprises Support (CARES) initiative, a GHS 100 billion programme over 2020-2023 30% financed by the government (Coface). Recurrent power cuts have led the Ghanaian Government to launch an energy diversification strategy, mainly by increasing the share of renewable energy and building nuclear plants. The government remains committed to the Energy Sector Recovery Programme (2019-2023) established in collaboration with the World Bank. Fiscal consolidation remains the priority, as illustrated by the additional 20% cut in the 2022 budget spending announced in January.

Despite Ghana's solid performance in terms of economic growth, the country is facing high inequalities, increasing poverty and unemployment. Ghana was ranked 138th in the 2020 Human Development Index. According to World Bank estimates, unemployment rate in the country was around 4.5% in 2020.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 68.3568.5075.4982.0287.74
GDP (Constant Prices, Annual % Change) 6.50.44.76.24.7
GDP per Capita (USD) 2,266e2,226e2,4132,5572,667
General Government Gross Debt (in % of GDP) 62.678.983.584.986.4
Inflation Rate (%) 7.1e9.9e10.016.313.0
Current Account (billions USD) -1.88-2.13-1.68-2.87-3.92
Current Account (in % of GDP) -2.7-3.1e-2.2-3.5-4.5

Source: IMF – World Economic Outlook Database, October 2021

Note: (e) Estimated Data

Main Sectors of Industry

Ghana, Africa’s largest gold producer, is rich in natural resources and benefits from a fertile soil. Agriculture represents 19.3% of GDP (World Bank), and employs 30% of the country’s workforce. Arable lands cover approximately 57% of the country's total land area (FAO). Most of the cultivated lands (95%) consist of small and medium-sized farms (up to 10 hectares). Crops vary considerably depending on the region. In the forest zone (southwest), tree crops, including cocoa, oil palm, coffee and rubber, are common. Maize, legumes, cocoyam or yam, with tobacco and cotton are among the most harvested crops in the middle belt of the country. Tobacco and cotton are also harvested in the north of the country, in addition to sorghum, millet, cowpeas and groundnuts. While livestock production is important, particularly in the north, Ghana still imports meat and dairy products to meet demand.

Industry accounts for 29.7% of GDP and employs 21% of the workforce. It is dominated by mining, lumbering, light manufacturing, aluminium smelting, food processing, cement production, small commercial ship building and petroleum. Gold, bauxite and manganese mining plays a key role thanks to the country's rich subsoil resources. Rich bauxite reserves coupled with high hydro stocks provide strong potential for aluminium smelting. Ghana also has a relatively sophisticated automotive industry and exports cars to other parts of Africa.
The service sector is the largest component of the economy comprising 45% of GDP and employing 49% of the workforce (World Bank). The banking sector has developed and modernized in recent years but has more room to grow. Telecommunications is the main service sector due to a rapid growth of mobile phone users and the emergence of mobile payment technologies.
 
Ghana's economy was hit by the COVID-19 pandemic. The manufacturing, oil production and service sectors (except telecommunications) were among the most impacted (Coface), while the agriculture sector remained resilient.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 29.8 21.0 49.2
Value Added (in % of GDP) 18.2 34.7 42.6
Value Added (Annual % Change) 7.4 -3.6 1.5

Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}

Score:
59,2/100
World Rank:
101
Regional Rank:
11

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

See the country risk analysis provided by Coface.
 

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Sources of General Economic Information

Ministries
Ministry of Finance
Ministry of Trade and Industry
Ministry of Energy
Statistical Office
Ghana Statistical Service
Central Bank
Bank of Ghana
Stock Exchange
Ghana Stock Exchange
Economic Portals
Ghana Trade
 

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Latest Update: September 2022