Ghana’s GDP Growth to Remain Below Pre-Crisis Levels Until 2029 – IFS
Ghana’s real GDP growth is projected to remain significantly below pre-crisis levels until 2029, posing challenges for job creation and employment generation, particularly among the country’s youth.
This is according to the Institute for Fiscal Studies (IFS), which has expressed concern over Ghana’s sluggish economic recovery and its implications for unemployment.
The economic think tank forecasts that Ghana’s GDP growth rate will range between 4.0% and 5.0%, with an average of 4.4% from 2024 to 2029.
Given this outlook, IFS is calling on the incoming government to implement strategic interventions in the real sector to accelerate growth beyond current projections.
“The Institute is, however, aware of the country’s weak fiscal position. We therefore recommend that the government approaches this through expenditure prioritization in favor of critical real sectors. We recommend first and foremost the agriculture sector,” IFS stated.
The organization emphasized that agriculture holds immense potential for stimulating economic growth and creating large-scale employment, as Ghana possesses favorable natural conditions for agricultural expansion.
According to World Development Indicators (WDI) data from the World Bank, Ghana had 126,037.4 square kilometers of agricultural land as of 2021, a resource that could be leveraged for increased production.
Call for Structural Reform in Ghana’s External Sector
Beyond economic growth, IFS is advocating for a restructuring of Ghana’s external sector, particularly by altering the ownership structure of the country’s two major merchandise exports.
The think tank noted that despite merchandise exports being the main driver of trade and current account balances, their impact on the stability of the cedi has been minimal.
Between 2017 and 2019, Ghana’s average merchandise exports stood at $14.815 billion, with an average trade surplus of $1.751 billion and a current account deficit of $1.970 billion.
During the period, the cedi depreciated at an average rate of 8.7% against the US dollar.
However, in 2020-2021, average merchandise exports declined by $215 million to $14.600 billion, worsening the trade surplus by $180 million and the current account deficit by $368 million.
IFS stressed that the cedi’s stability has not been significantly influenced by merchandise exports and their impact on trade and current account balances.
Instead, the government has relied heavily on international borrowing under the capital and financial account of the balance of payments to manage exchange rate pressures.
The institute’s analysis underscores the need for structural reforms in both the real and external sectors of the economy to drive sustainable growth, reduce unemployment, and strengthen the stability of the cedi.
