Ghana’s current account deficit is expected to narrow to 2.8 percent of Gross Domestic Product (GDP) this year from 3.3 percent last year.
This is according to an assessment of the impact of Covid-19 on the inflow of remittances into Sub-Sahara African countries by research arm of Fitch Ratings, Fitch Solutions.
According to Fitch Solutions, increment in remittances aside narrowing the current account deficit, will also help stabilize the local currency and maintain the prices of most imported goods.
“Ghana is a key recipient of remittances, and remittances do play a key role in balance of payments, and certainly as labour market conditions improve in countries such as the US and UK which are major sources of remittance to Ghana, we expect remittances to rise and will at least contribute to the narrowing of the current account balance from 3.3 percent to 2.8 percent of GDP,” stated William Artwell, member of the Sub-Saharan team of Fitch Solutions.
Ghana, on the back of the Covid-19 pandemic recorded a current account deficit of $897 million last year, which represents an increase of $531 million from the 2019 current account deficit of $366 million.
According to a report by the United Nations Department of Economic and Social Affairs (UN DESA), Ghanaian migrants’ remittances in 2019 stood at $3.7 billion, which equals 5.5 percent of the country’s Gross Domestic Product (GDP).
The report notes that currently, some 970,000 Ghanaians live and work outside the country, representing a rapidly-growing cohort of the Ghanaian populace with a significant contribution to the country’s GDP.
Adding that if remittances into the country is managed properly, it could be of immense benefit to the economy.
