Ghana’s macroeconomic performance improved in 2017 after a difficult 2016. The country’s economy expanded for the fifth successive quarter in September 2017, at a rate almost double that of 2016. The external position has improved as the trade balance has shifted to a surplus. Ghana has made good progress in macro-stabilization in 2017, but it needs to sustain the fiscal consolidation efforts. According to the report, inflation is likely to fall within or be close to the Bank of Ghana’s medium-term target range of 6-10 percent in 2018.
Despite the positive outlook, challenges remain, including further containing inflation and strengthening and deepening the financial sector to lower interest rates. Ghana’s economic performance over the medium term will, to a large extent, depend on the success of the economic stabilization program. Ghana is also likely to face higher financing costs in both the domestic and external markets in the context of a strong U.S. dollar and rising global bond yields.
Political Stability Renews Investors’ Confidence
Ghana has continued to consolidate democratic rule, and enjoys an open society, with a vibrant media and strong public dialogue. Because of these and other political achievements, Ghana outperforms most countries in West Africa and in the continent on measures of civil liberty, political rights and political stability.
The country ranks 8th out of 54 countries on the 2016 Ibrahim Index of African Governance (IIAG) and 7th out of 48 countries in Africa on the Worldwide Governance Indicators (WGI). Ghana has a solid democratic tradition, completing its seventh consecutive peaceful democratic election in December 2016.
Oil Sector Rebound
After a prolonged period of serious economic deterioration due to excessive government intervention, hyperinflation and loose fiscal management, in 1983 Ghana launched an Economic Recovery Programme (ERP), as proposed by the IMF and the World Bank. Ghana is currently experiencing its second oil boom during a few years. The economic benefits are likely to be felt in 2018 as production increases and is expected to drive growth.
Though growth slowed from its peak in 2011, Ghana has outperformed the West African and sub-Saharan African (SSA) regional growth rates since.
Pro-Business reforms to boost trade
Ghana provides a relatively more competitive operating environment compared to other key economies in the region. Though it boasts a much smaller market than Nigeria, a lower likelihood of terrorism and much fewer incidences of violent assault are reported in Ghana. The country provides a more clearly regulated and open market system when compared to regional peers such as Nigeria, Côte d’Ivoire and Senegal. The country’s predictable operating environment sets it apart as a suitable point of entry for businesses looking to invest in West Africa.
Ghana ranked 13th in SSA, and among the most competitive business destinations in West Africa. Ghana outperformed the average Sub Saharan Africa countries score in all 12 competitiveness pillars.
Public Investment Opportunities
Currently, there are no formal privatization programs in Ghana. However, the government is has for objective to restructure and privatise non-performing state-owned enterprises. Back in 2014, Ghana’s Ministry of Finance and Economic Planning published a pipeline of project opportunities in which foreign and local investors can participate.
An Optimistic Future
According to the International Monetary Fund (IMF), Ghana’s economic growth for 2019 is forecasted at 7.6 percent. Inflation is also expected to go down to 8.0 percent. With better control over its domestic resources and expenditure, the country’s economy seems much more stable than before.
However, challenges remain, especially when it comes to diversifying Ghana’s economy. Heavy reliance on primary commodities, such as oil, gold and cocoa, are all prone to volatile international prices. To sustain the fiscal consolidation achieved so far, Ghana needs to ensure social and economic activities can thrive in an expanding and increasingly diverse economy.
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