Ghana’s economy has had a slow recovery from the shock caused by the COVID-19 pandemic. Real GDP growth is projected to increase from an annual average of 3.7% for 2019 to 2021, to 5.2% in 2022. Inflation is projected to increase from an annual average of 9.0% for 2019 to 2021, to 16.3% in 2022. The elevated inflation is caused by the sanctions against Russia which have increased the price of crucial imports. In the medium-term period from 2023 to 2025, real GDP growth is projected to increase slightly to an annual average of 5.3%. Meanwhile, inflation is projected to decrease to an average of 9.7% over the medium-term from 2023 to 2025.
The Government of Ghana’s debt has been steadily increasing since 2020. Ghana’s gross public debt is projected to increase from an annual average of 74.3% of GDP for 2019 to 2021, to 84.6% of GDP in 2022. The increase in public debt is largely due to depreciation of the GHS and the Government of Ghana implementing countercyclical fiscal expansion to support the economic recovery from the shock caused by the global lockdown response to the COVID-19 pandemic. The fiscal deficit is projected to narrow from an annual average of -11.5% of GDP for 2019 to 2021, to -8.7% in 2022. This shows the countercyclical fiscal stance taken by the government despite spending and further borrowing outpacing revenue growth. In the medium-term period from 2023 to 2025, the fiscal deficit is projected to narrow to an annual average of -7.6% of GDP. However, public debt is projected to increase slightly to an average of 85.8% of GDP over the medium-term from 2023 to 2025.
Ghana’s external sector was not severely affected by the COVID-19 pandemic in 2020 but the sector has continued deteriorating despite the rebound in commodity prices, which has raised demand for imports. Ghana’s current account deficit is projected to widen from an annual average of -USD 2.1 billion (approx. -3.0% of GDP) for 2019 to 2021, to -USD 2.7 billion (approx. -3.6% of GDP) in 2022. In the medium-term period from 2023 to 2025, the current account deficit is projected to widen to an annual average of -USD 3.1 billion (approx. -3.7% of GDP). This illustrates a continuous deterioration in the current account balance despite the current rebound in commodity prices which is primarily driven by the impact of sanctions against Russia. Therefore, Ghanaian authorities will have to take a proactive approach to macroeconomic management in further diversification of the country’s exports away from the continued reliance on gold, oil and cocoa.
Ghana is scheduled to hold its national elections in 2024 and the election campaigning cycle is still a long way ahead. Incumbent President H.E. Nana Akufo-Addo won’t eligible for re-election given that he is serving a second term in office using his economic recovery rhetoric. The current political climate remains relatively calm despite economic pressures to resolve the energy supply constraints, slow recovery and the fiscal crisis caused by the depreciation of the GHS. President Akufo-Addo will spend the rest of his term be preoccupied with saving a legacy that has been marred by the current economic challenges and rising political instability in some ECOWAS member states.
President H.E. Nana Akufo-Addo will also seek to play a more meaningful role in resolving conflicts and returning civilian rule in some ECOWAS members states in West Africa and the Sahel. ECOWAS deployed new missions and strengthened existing missions to support stabilisation in Burkina Faso, Guinea and Mali. Although there has been some progress in Burkina Faso with the adoption of the Transitional Charter which allows the military junta to lead the three-year transition to constitutional rule, there has been little progress in Guinea and Mali. Guinean the transitional authorities have failed to meet the ECOWAS six-months deadline for the return to constitutional rule following the military coup of September 2021. Meanwhile, in Mali, the ECOWAS delegation led by H.E. Goodluck Ebele Jonathan failed to make any further progress in their negotiations on a timetable for elections and the return to constitutional rule. ECOWAS has threatened to apply sanctions against Burkina Faso if former President Roch Marc Christian Kaboré was not released and the three-year transitional plan was not revised; and against Guinea if the military junta did not finalise a transitional plan. ECOWAS decided to uphold sanctions imposed against Mali since January 2022, continue with negotiations to ensure a gradual lifting of the sanctions and called for further humanitarian support. These remain the central aims in Ghana’s regional priorities as the incumbent Chair of ECOWAS.