Statistics and Facts About the Ghana Economy
Ghana is a country in West Africa that borders the Atlantic Ocean and the Gulf of Guinea. It also shares borders with Ivory Coast, Burkina Faso, and Togo. While the country’s economy is growing, the public debt is high. To better understand the situation, here are some statistics and facts about the Ghana economy.
Real GDP growth is projected to reach 5.5% in 2022
The latest projection by the U.S. Bureau of Labor Statistics points to slower growth in the United States during the second half of the decade. However, there are still several obstacles facing the American economy. Demographic shifts will continue to affect the labor force, and the slowing participation rate will likely moderate growth. Furthermore, the need to limit the country’s debt to GDP ratio will continue to weigh on fiscal policy decisions. The federal government is also expected to cut spending further and limit discretionary spending.
The European economy is on track to return to pre-pandemonamic growth this year, and is projected to grow by 4.6% by 2022. A solid labor market will help boost consumer spending and support the economy. In addition, developed market central banks are unlikely to take drastic measures to dampen growth.
The UK is facing the prospect of a recession for the next three quarters, but the government has taken measures to reduce the risk of a severe downturn. However, the outlook for 2023 has been revised down to a 0.3% contraction, down from the initial forecast of 1% growth. In addition, growth for 2022 has been upgraded to 4.3% from 3.7% as a result of the ONS’s revisions to historical data.
Real GDP growth will slow in 2023
The Ghanaian economy will continue to suffer from the effects of the recent pandemic and is unlikely to reach pre-pandemic levels. In addition, the ongoing conflict in Ukraine could compound the situation. These tensions will raise global prices of key commodities such as food, fuels, fertilizers, and metals used in manufacturing, adding to inflationary pressures in Ghana.
The country is facing high risk of debt distress and will need IMF support, which is likely to arrive in the second half of 2023. Rising prices and a tightening monetary policy will weigh on household consumption and investment. Meanwhile, government spending will decline. As a result, real GDP growth in Ghana will slow in 2023 to 5.3%. Meanwhile, the government expects growth of 5.8% in 2027, but this growth will be offset by an uptick in gold exports.
The weaker cedi will add fuel to inflation. In July, inflation in Ghana came in at 31.7% y/y, which is close to a 19-year high. This prompted the Central Bank to call an emergency meeting and hike interest rates by 300 bps to 22%. Further, the weak cedi will hinder economic activity. The GDP growth rate in Q1 was only 3.3% y/y, and business confidence has fallen.
Ghana’s public debt is high
The growing public debt in Ghana poses a significant risk to the country’s future. The country has been experiencing continuous budget deficits and depreciation of its currency, which has exacerbated the problem. It has also accumulated large debts in the energy sector, where it owes money to power suppliers and producers. As a result, it is not generating enough revenue to service its debts.
In addition, Ghana’s debt to GDP ratio is higher than in similar rated countries. While this number is not out of the ordinary, it does pose a problem to investors. According to a recent Bloomberg study, Ghana’s debt to GDP will exceed eighty-six percent by the end of this year, and will reach more than C/400 billion by 2022. As of the first quarter of 2021, Ghana’s public debt was C/391 billion.
The IMF and the World Bank have classified Ghana as a high-risk country in their debt sustainability assessments. In fact, Ghana’s public debt has risen steadily since independence, with the exception of a brief period during the 1990s, when the country was subject to an international debt relief intervention. Since then, the country’s public debt has continued to rise despite the slow growth in its economy. As of August 2019, Ghana’s public debt was at an all-time high. Despite this, the country’s economy grew by 2.4 percent, making it one of the fastest growing economies in Africa.
Tourism is a major industry in Ghana
Ghana’s tourism industry has contributed significantly to the country’s economy. In the late 20th century, it became one of the country’s leading foreign exchange earners, more than tripling in the 1990s. The growth was partly attributed to the rehabilitation of historic monuments and the development of ecotourism in the Kakum National Park. Ghana is home to thirty surviving stone forts, including the Elmina Castle, built by the Portuguese in 1482 and the Cape Coast, a British fort built in 1655.
According to the World Economic Forum, Ghana’s tourism industry is a major driver of economic growth and job creation. Ghana’s natural and cultural assets provide a rich source of tourist income, boosting the economy. Furthermore, the industry contributes to Ghana’s government’s tax revenue and foreign exchange earnings. Overall, tourism generates 4.9% of Ghana’s GDP.
The hospitality sector contributed 4.2% of Ghana’s real GDP in 2020. The decrease in employment in the tourism sector was due to high volatility in the exchange rate, affecting both export and local investors. However, this trend is likely to improve in the near-term. The improvement in the hospitality sector would increase tourism expenditure.
Wind power potential in Ghana
Wind power is a renewable energy resource with high potential in Ghana. The Asante region of the country has a potential of 254 watts per square meter, making it a good place to develop a utility-scale wind farm. The wind speed in the Asante region is between 6.0 and 6.4 m/s and mainly blows from the southwest and west south. The wind density is also high, which helps explain the availability of the resource.
There is a great potential for wind energy in Ghana, which would be greatly enhanced with the creation of a conducive business environment. The private sector could play a catalytic role in the scaling up of the energy sector in Ghana. To this end, the African Development Bank (AfDB) and private developers have collaborated to make wind energy a viable option for the country.
The country’s population is increasing, which means there is a higher need for energy. Ghana’s population is expected to reach more than 45 million people by 2040, with a growth rate of over 2%. With such a growth in population, Ghana will need enough energy to sustain itself. Wind energy is an excellent option to meet the country’s growing demand for energy.
Cost of living in Ghana
The cost of living in Ghana varies a lot. Food, transportation, and housing can all cost more than what you are used to. But for those looking for an affordable option, Ghana can be an excellent place to live. The country has a high number of natural resources, which keeps the cost of living low.
At the time of writing, the Ghanaian Cedi is worth $0.17 USD. However, this price varies widely between different areas, styles of life, and lifestyles. The exchange rate is unstable, and unless Ghana’s economy grows, the value of the Cedi will continue to drop.
The cost of living in Ghana varies widely, but the average cost of living in the country is about $581. This is almost one-fifth of what it costs in the United States. Similarly, the cost of supermarket food is about 63% less expensive than in the United States. A person’s after-tax salary is enough to cover their expenses for 0.6 months in Ghana, compared to 2 months in the United States.
The cost of healthcare is relatively cheap in Ghana, with a standard visit costing about $20-30. However, if you have a serious illness, you might need to seek medical attention, which can cost more than $100. The cost of transportation is affordable. You can use public transport to get around the city for about $5.