Ghana Economic Outlook
- GDP growth for 2012 is estimated at 7.1%, driven by oil revenues, the services sector and the strong export performance of cocoa and gold. Ghana’s mediumterm growth outlook remains positive, thanks to large investments in the extractive industries, public infrastructure and commercial agriculture.
- The successful inauguration of President John Mahama in January 2013, following the death of incumbent John Evans Atta Mills in July 2012, indicates further consolidation of democracy. The depth and maturity of the country’s democracy are being further tested by the New Patriotic Party case in the Supreme Court contesting the election results.
- Despite significant progress towards most of the MDGs, the country continues to be challenged by MDG 4, reduce child mortality; MDG 5, improve maternal health; and the sanitation component of MDG 7.
Gross domestic product (GDP) growth decelerated from 14.4% in 2011 to 7.1% in 2012. The economic growth peak in 2011 was due to the start-up of oil production in the last quarter of 2010. The growth performance in 2012 was achieved despite lower cocoa and oil production. Ghana’s medium-term outlook remains healthy, with projected GDP growth of 8.0% (6.5% non-oil) in 2013 and 8.7% (8.9% non-oil) in 2014, well above the average annual growth rate of 6.5% for the period since 2000. Investments in the oil and gas sectors, public infrastructure and commercial agriculture are expected to drive this growth.
Improved macroeconomic management and enduring political stability have not significantly transformed the structure of Ghana’s economy over time. Mining and construction have sustained the industrial sector, while manufacturing has been declining as a share of GDP over the past 20 years. The country needs to develop new, labourintensive economic sectors such as manufacturing and agro-processing in order to tackle the employment challenge and provide economic opportunities to rural areas. This will require coherent public policies to raise agricultural yields, improve the competitiveness of the economy and overcome land tenure issues. Decisions on how to spend the country’s increasing oil revenue, projected at several billion US dollars (USD) over the next two decades, will be crucial to future economic transformation. The increased oil revenue and foreign direct investment (FDI) inflows may result in strong upward pressure on the exchange rate and threaten prospects for industrialisation. In 2010, Ghana enacted a legal framework for sound management of its oil wealth, and thus far its programme of hedging oil imports and exports has succeeded in maintaining macroeconomic stability.
The successful inauguration of President John Mahama on 7 January 2013, following the death of incumbent John Evans Atta Mills in July 2012 and the elections in December 2012, is considered an indication of further strengthening of democracy in Ghana. International observers noted that the elections had been relatively free and fair. However, the New Patriotic Party (NPP) has contested the election results and petitioned the Supreme Court for redress. This issue has divided the country on political lines rather than ethnic lines.
The slight risk of political destabilisation of the country would be greatly reduced by an early resolution to the court case.
Although Ghana has been classified as a low middle-income country by the World Bank since 2010, its development indicators compare poorly with those of most countries in this category. Ghana has made significant progress towards attaining the Millennium Development Goals (MDGs). It is likely to attain the MDGs on the eradication of extreme poverty, universal primary education, promotion of gender equality, empowerment of women, and combating HIV/AIDS, malaria and other diseases. Ghana continues to be challenged by slow progress on reduction of under-5 mortality, improvement of maternal health and environmental sustainability.