Recent Developments & Prospects

Macroeconomic Policy

Fiscal Policy

Monetary Policy

Economic Cooperation, Regional Integration & Trade

Debt Policy

Economic & Political Governance

Private Sector

Financial Sector

Public Sector Management, Institutions & Reform

Natural Resource Management & Environment

Political Context

Social Context & Human Development

Building Human Resources

Poverty Reduction, Social Protection & Labour

Gender Equality

Thematic analysis: Structural transformation and natural resources

Authors: Eline Okudzeto, Wilberforce Aminiel Mariki, Sylvia Sefakor Senu, Radhika Lal

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  • Although Ghana registered relatively commendable economic growth in 2014, the economy faced major challenges in the form of a sharp currency depreciation, deepening energy crisis, deteriorating macroeconomic imbalance, and rising inflation and interest rates.
  • Over the medium term, the economy is projected to recover, bolstered mainly by higher oil and gas production, combined with increased private sector and public infrastructure investments, as well as an improved macroeconomic framework and political stability.
  • Ghana’s accelerated economic growth over the past decade has helped the country achieve the MDG goal of halving poverty, although there is evidence of growing disparities in spatial development and income inequality across regions, especially in the three northern regions. Progress in the achievement of other MDGs remains mixed, with the 2015 targets likely to be missed.

Ghana’s economy is expected to slow down for the fourth consecutive year to an estimated 3.9% growth rate in 2015, owing to a severe energy crisis, unsustainable domestic and external debt burdens, and deteriorated macroeconomic and financial imbalances. Provisional gross domestic product (GDP) figures issued by Ghana Statistical Services (GSS) further suggest that the economy expanded by 4.2% in 2014, less than the growth of 7.3% recorded in 2013. The drivers of growth continue to be the service sectors, which constitute 50.2% of the economy, followed by industry and agriculture at 28.4% and 19.9% respectively. In 2016 the economy is expected to recover, registering a growth of around 6%, bolstered by an increase in oil and gas production, private sector investment, improved public infrastructure and the country’s political stability. Nonetheless, the prevailing low international oil prices could slow the pace of economic growthin the future.

High growth rates over recent years have been accompanied by the build-up of macroeconomic imbalances. In 2014 current account and fiscal deficits widened to 9.2% and 10.4% of GDP respectively, and the rate of inflation averaged 17.0%. By the end of December 2014, foreign reserves were at 3.2 months of import cover, thanks to inflows from the Eurobond of USD 1 billion and a cocoa syndicate loan of USD 1.7 billion. The domestic currency, the cedi (GHS) depreciated by over 30% in nominal terms over the first nine months of the year compared to a depreciation of 4.1% during the corresponding period in 2013. The continued growth in the budget deficit resulted in public debt increasing from 55.8% of GDP in December 2013 to 67.1% of GDP by the end of December 2014. To address the increasingly unsustainable fiscal and current account imbalances, the Ghanaian authorities started negotiations for a stabilisation programme with the International Monetary Fund (IMF) that was expected to begin in early 2015.

Table 1: Macroeconomic indicators

Real GDP growth7.
Real GDP per capita growth5.
CPI inflation11.7178.38.7
Budget balance % GDP-9.5-10.4-9.5-9.9
Current account balance % GDP-11.9-9.2-12.7-17.3

Source: Data from domestic authorities; estimates (e) and projections (p) based on authors’ calculations.