Ghana Economic Outlook

  • Ghana’s economic growth, which had slowed from 4.0% in 2014 to 3.7% in 2015, is expected to recover to 5.8% in 2016 and 8.7% in 2017, following consolidation of macroeconomic stability and implementation of measures to resolve the crippling power crisis.
  • Monetary and fiscal policies were tightened in 2015 and are expected to remain so in 2016 in line with the fiscal and monetary policy consolidation reforms underway as Ghana prepares for national elections in late 2016.
  • Ghana continues to experience rapid urbanisation, which has led to a number of sustainable development challenges, particularly regarding sanitation and transportation infrastructure.

In 2015, the Ghanaian economy grew at an estimated 3.7%, down from 4% in 2014. The 2015 slowdown resulted from a number of economic challenges, most of which were in play in 2014. These include a 3-year power crisis, rising fiscal deficit and public debt levels, a significant external sector deficit and unpredictably low world market prices for the country’s oil and gold exports. The services sector was the main driver of growth. The industrial sector also posted a positive growth rate of 9.1%. Over the medium term the country should see a recovery with a projected GDP growth of 5.8% in 2016 and 8.7% in 2017. The forecasted recovery in economic growth in 2016/17 depends on fiscal consolidation measures remaining on track, quick resolution of the power crisis, two new oil wells coming on-stream, and improved cocoa harvest and gold production.

Ghana maintained a tight monetary and fiscal policy in 2015. The government’s fiscal consolidation programme aimed to address demand pressures exacerbated mostly by the wage bill and by public debt services, which account for most un-earmarked revenues. Monetary policy in 2015 continued to be tightened with measures to contain rising inflation and the depreciation of the domestic currency. To address these challenges, government entered into a 3-year Extended Credit Facility (ECF) agreement with the International Monetary Fund (IMF) in April 2015, successfully undertaking two reviews under the programme. The fiscal consolidation stance is expected to meet the conditions of the reviews in 2016 as well. Ghana will hold its national election in late 2016; peaceful and credible elections will be key for policy continuity and for solidifying the country’s democratic dividend, especially after the closely contested 2012 elections and the judicial adjudication of the presidential elections.

By 2010 over half of Ghana’s population lived in urban areas (localities with a population of 5 000 or more), as compared to 30% at independence in 1957. The urbanisation rate is projected to increase to 72% by 2035. While rural-urban disparities are still significant, there are signs that Ghana’s cities are facing considerable challenges with land use, infrastructure and services provision (particularly with regard to housing, sanitation and transportation), and the absence of gainful and productive employment opportunities, especially for the youth. The critical policy challenge has been to ensure orderly and sustainable spatial development, co-ordination and planning, and measures to enable metropolitan and municipal authorities to secure adequate financing for infrastructure and services.