The Institute for Fiscal Studies (IFS) has projected that Ghana’s real GDP growth will remain significantly below pre-crisis levels until 2029, raising concerns about job creation and employment generation.
According to the economic think tank, the country’s GDP growth rate is expected to range from 4.0% to 5.0%, with an average rate of 4.4% between 2024 and 2029.
Given Ghana’s high unemployment rate, especially among the youth, the IFS has urged the incoming government to implement strategic interventions to boost economic growth beyond these 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,” the statement read.
Agriculture as a Key Growth Driver
The IFS emphasized that agriculture has significant potential to drive economic growth and create jobs, given Ghana’s favorable natural conditions.
It noted that Ghana has abundant sunshine, favorable rainfall levels, and extensive agricultural land—126,037.4 square kilometers as of 2021, according to World Bank data—making it well-positioned for large-scale agricultural production.
Resetting Ghana’s External Sector
The IFS also called for reforms in Ghana’s external sector, particularly in the ownership structure of the country’s major merchandise exports.
It observed that despite being a key driver of trade and current account balances, Ghana’s merchandise exports have had little effect on stabilizing the cedi.
Between 2017 and 2019, Ghana’s average merchandise exports stood at $14.815 billion, with an average trade balance of $1.751 billion and an average current account deficit of $1.970 billion. However, the cedi still depreciated at an average rate of 8.7% against the US dollar during this period.
In 2020-2021, merchandise exports declined by $215 million to $14.600 billion, causing the trade balance to worsen by $180 million to $1.571 billion, while the average current account deficit widened by $368 million to $2.338 billion.
The IFS noted that the cedi’s performance does not significantly correlate with merchandise exports and trade balances. Instead, the government has relied heavily on international borrowing to manage the cedi under the capital and financial account of the balance of payments.
The institute stressed the need for a shift in economic strategy, focusing on sustainable domestic production and ownership of export industries to strengthen the country’s external sector and enhance economic resilience.
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