Figure 1: Merchandise Trade Balance in Ghana (2015-2018)
Source: UNCTAD 2019, UNCTADStat Database.
Total merchandise imports to Ghana have decreased to USD 11.9 billion in 2018, from an annual average of USD 13.0 billion from 2015 to 2017[1]. Exports increased to USD 14.6 billion in 2018 from an annual average of USD 11.6 billion from 2015 to 2017[2]. The stronger increase in exports and the decline in imports has led to a slight improvement of Ghana’s merchandise trade surplus to USD 2.8 billion in 2018 from a trade deficit averaging -USD 1.4 billion from 2015 to 2017[3]. In spite of the improving merchandise trade balance, gross official reserves have not improved significantly.
Gross official foreign exchange reserves increased to USD 5.3 billion in 2018 from an annual average of USD 4.7 billion from 2015 to 2017[4]. During this period, the GHS depreciated by -4.7% in 2018 to GHS 4.6 per USD (2017: -10.1%)[5]. The incremental depreciation in the currency has driven the faster decline in imports following the depreciation in 2015 and 2016. The GHS depreciated by an annual average of -12.3% from GHS 3.7 per USD in 2015 to GHS 4.4 per USD in 2017[6]. Gross official reserves are projected to increase to USD 5.6 billion in 2019, which is equivalent to 2.7 months’ import cover[7]. In the forward-looking medium-term from 2020 to 2022, gross official reserves are projected to increase to an annual average of USD 7.4 billion (approx. 3.1 months’ import cover)[8]. The increase in exports and declining imports has led to an improvement on the current account deficit.
Figure 2: Gross Official Reserves in Ghana (2016-2022)
Sources: IMF 2019a, Ghana Seventh and Eighth Reviews Under the Extended Credit Facility Arrangement; IMF 2017, Ghana 2017 Article IV Report. Notes: (*) Figures from 2018 onwards are projections from the IMF, 2019; (**) Figures for 2022 are projections from the IMF, 2017.
Ghana’s current account balance improved to a deficit of -USD 2.1 billion in 2018, from a deficit averaging -USD 2.6 billion from 2015 to 2017[9]. In spite of the decline in merchandise imports, which improved the current account balance, the current account balance improvement has been undermined by increased services imports and foreigners’ income from Ghana. Services imports increased to USD 7.5 billion in 2018 from an annual average of USD 6.4 billion in 2015 to 2017[10]. In addition, foreigners’ income from Ghana increased to USD 4.5 billion in 2018 from an annual average of USD 2.0 billion in 2015 to 2017[11]. The current account balance is projected to improve slightly to a deficit of -USD 2.0 billion (approx. -3.0% of GDP) in 2019[12]. In the forward-looking medium-term from 2020 to 2022, the current account balance is projected to deteriorate to a deficit averaging -USD 2.6 billion (approx. -3.7% of GDP)[13].
Figure 3: Current Account Balance in Ghana (2016-2022)
Sources: IMF 2019a, Ghana Seventh and Eighth Reviews Under the Extended Credit Facility Arrangement; IMF 2017, Ghana 2017 Article IV Report. Notes: (*) Figures from 2018 onwards are projections from the IMF, 2019; (**) Figures for 2022 are projections from the IMF, 2017.
However, Ghana is still heavily dependent on raw commodity exports which have been affected by commodity price volatility and the general decline in commodity prices since 2014. For example, Brent crude oil prices declined by an annual average of -24.0% from USD 98.9 per barrel in 2014 to USD 44.0 per barrel in 2016, before recovering to USD 54.4 per barrel in 2017[14]. Gold prices have been volatile having declined by an annual average of -9.3% in 2015 and 2016 to USD 1160.1 per ounce in 2015, before recovering to its medium-term average of USD 1258.2 per ounce from in 2016 to 2018[15]. The price of cocoa beans has also declined by an annual average of -11.7% from USD 3135.2 per MT in 2015 to USD 2029.3 per MT in 2017, before recovering to USD 2293.7 per MT in 2018[16]. Crude oil, gold and cocoa constituted 81.8% of Ghana’s total export earnings in 2018 which has increased slightly from the average of 78.0% from 2015 to 2017 (2014: 79.4% of exports)[17]. In addition to this concentration of exports, Ghana is poorly integrated in terms of regional trade with neighbouring countries in ECOWAS.
The top-five exports from Ghana to ECOWAS in 2018 are plastics (0.8%), petroleum (0.5%) and vegetable oil (0.4%)[18]. Although these exports are slightly diversified they constituted only 1.7% of total exports from Ghana in 2018 (2015-‘17: 2.7% of total exports)[19]. The value of the top-five exports from Ghana to ECOWAS decreased slightly to USD 241.9 million in 2018 from an average of USD 312.8 million from 2015 to 2017[20].
Figure 4: Nominal Exchange Rate in Ghana (2015-2018)
Source: BoG 2019, Monetary Time Series Data: Inter-Bank Exchange Rates Monthly Average GHC/US$. Note: (*) Annual Nominal Ave Exchange Rate as at November 2018.
The value of total exports from Ghana to ECOWAS decreased to USD 625.0 million (approx. 4.3% of total exports) in 2018 from an average of USD 828.3 million (approx. 7.1% of total exports) for 2015 to 2017[21]. These are poor or below-average levels of intra-regional trade given that the ECOWAS average intra-regional exports level was 11.9% of total exports in 2018. The ECOWAS intra-regional exports, meaning total exports amongst ECOWAS countries, as a share of total exports to the world increased from an average of 10.5% from 2015 to 2017[22].
Ghana’s top-five imports from ECOWAS are ships and boats, construction equipment, motor vehicles, food and vegetable oil. Although these imports are diversified they constituted only 3.5% of total imports to Ghana in 2018 (2015-‘17: 2.7% of total imports)[23]. The value of the top-five imports from ECOWAS to Ghana increased to USD 417.6 million in 2018 from an annual average of USD 359.6 million from 2015 to 2017[24].
The value of Ghana’s total imports from ECOWAS decreased to USD 1.1 billion (approx. 9.1% of total imports) in 2018 from an annual average of USD 1.2 billion (approx. 9.4% of total exports) from 2015 to 2017[25]. These are relatively good or above-average levels of intra-regional trade given that the ECOWAS average intra-regional imports level was 6.5% of total imports in 2018[26]. The ECOWAS intra-regional imports, meaning total imports amongst ECOWAS countries, as a share of total imports from the world increased only slightly from an average of 5.5% from 2015 to 2017[27].
Table 1: ECOWAS Regional Trade for Ghana (2015-2018)
Source: UNCTAD 2019, UNCTADStat Database.
Ghana maintains a persistent merchandise trade deficit in ECOWAS which increased to -USD 451.4 million in 2018 (2015-’17: -USD 402.7 million). Hence, there is still significant room for Ghana to increase exports to ECOWAS countries. This would make Ghana’s intra-regional trade balance in ECOWAS more equitable.
[1] UNCTAD 2019. UNCTADStat Database, United Nations Conference on Trade and Development: Geneva. Available At: https://unctadstat.unctad.org/ [Last Accessed: 26 September 2019].
[2] UNCTAD 2019. UNCTADStat Database, ibid.
[3] UNCTAD 2019. UNCTADStat Database, ibid.
[4] IMF 2019a. Ghana Seventh and Eighth Reviews Under the Extended Credit Facility Arrangement, International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 26 September 2019]; IMF 2017. Ghana 2017 Article IV Report, International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 26 September 2019];
[5] BoG 2019a. Inter-bank Daily Foreign Exchange Rate in (USD) – Archive, Bank of Ghana: Accra. Available At: https://www.bog.gov.gh/ [Last Accessed: 26 September 2019].
[6] BoG 2019a. Inter-bank Daily Foreign Exchange Rate in (USD) – Archive, ibid.
[7] IMF 2019a. Ghana Seventh and Eighth Reviews Under the Extended Credit Facility Arrangement, ibid.
[8] IMF 2019a. Ghana Seventh and Eighth Reviews Under the Extended Credit Facility Arrangement, ibid.
[9] IMF 2019a. Ghana Seventh and Eighth Reviews Under the Extended Credit Facility Arrangement, ibid.
[10] BoG 2019b. Annual Report 2018, Bank of Ghana: Accra. Available At: https://www.bog.gov.gh/ [Last Accessed: 26 September 2019].
[11] BoG 2019b. Annual Report 2018, ibid.
[12] IMF 2019a. Ghana Seventh and Eighth Reviews Under the Extended Credit Facility Arrangement, ibid.
[13] IMF 2019a. Ghana Seventh and Eighth Reviews Under the Extended Credit Facility Arrangement, ibid.
[14] IMF 2019b. IMF Primary Commodity Prices, International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 4 October 2019].
[15] IMF 2019b. IMF Primary Commodity Prices, ibid.
[16] IMF 2019b. IMF Primary Commodity Prices, ibid.
[17] UNCTAD 2019. UNCTADStat Database, ibid.
[18] UNCTAD 2019. UNCTADStat Database, ibid.
[19] UNCTAD 2019. UNCTADStat Database, ibid.
[20] UNCTAD 2019. UNCTADStat Database, ibid.
[21] UNCTAD 2019. UNCTADStat Database, ibid.
[22] UNCTAD 2019. UNCTADStat Database, ibid.
[23] UNCTAD 2019. UNCTADStat Database, ibid.
[24] UNCTAD 2019. UNCTADStat Database, ibid.
[25] UNCTAD 2019. UNCTADStat Database, ibid.
[26] UNCTAD 2019. UNCTADStat Database, ibid.
[27] UNCTAD 2019. UNCTADStat Database, ibid.
