Ghana flag Ghana: Economic and Political Overview

The economic context of Ghana

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) 72.2476.2875.2476.0281.08
GDP (Constant Prices, Annual % Change) 3.12.32.84.44.9
GDP per Capita (USD) 2,2522,3182,2302,1972,285
General Government Gross Debt (in % of GDP) 93.386.183.680.977.9
Inflation Rate (%) 31.737.522.311.58.0
Current Account (billions USD) -1.52-1.26-1.39-1.68-1.93
Current Account (in % of GDP) -2.1-1.7-1.9-2.2-2.4

Source: IMF – World Economic Outlook Database, October 2021

Main Sectors of Industry

Ghana, Africa’s largest gold producer, is rich in natural resources and benefits from fertile soil. Agriculture represents 19.6% of GDP and employs 40% of the country’s workforce (World Bank, latest data available). 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 32% of GDP and employs 19% of the workforce. The sector is dominated by mining, lumbering, light manufacturing, aluminum smelting, food processing, cement production, small commercial shipbuilding, and petroleum. Gold, bauxite, and manganese mining play a key role thanks to the country's rich subsoil resources. Rich bauxite reserves coupled with high hydro stocks provide strong potential for aluminum 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 42% of GDP and employing 41% of the workforce. The banking sector has developed and modernized in recent years but has more room to grow. In the past, the banking sector in Ghana was largely controlled by state-owned institutions and lacked significant competition. However, over the last decade, there has been a shift as certain state-owned banks underwent privatization through the government's Divestiture Implementation Program. Telecommunications is the main service sector due to rapid growth in mobile phone users and the emergence of mobile payment technologies. According to data from the Ministry of Tourism, in the first half of 2023, the country recorded half a million visits, with tourism revenue estimated at USD 3.4 billion for the year as a whole.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 39.5 19.1 41.4
Value Added (in % of GDP) 18.8 31.5 44.1
Value Added (Annual % Change) 0.4 5.7 2.3

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

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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: April 2024

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