Ghana’s real GDP growth would stay significantly below the pre-crisis level until 2029.
According to the Institute for Fiscal Studies, this is bad news for job creation and employment generation, given that the country is suffering from high rates of unemployment, particularly among the young population.
The country’s GDP growth rate has been projected to range from 4.0% to 5.0%, with an average rate of 4.4% from 2024 to 2029.
In a statement, the economic think tank called on the new government to strategically intervene in the real sector to help boost economic growth beyond what has been projected to significantly enhance job creation and reduce unemployment in the country.
“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”, it pointed out.
It stated that agriculture has a great potential to stimulate accelerated economic growth and massive job creation, which can significantly bring down the rate of unemployment in Ghana. This is because all the natural conditions necessary for a thriving agriculture are present in Ghana.
For instance, it said weather conditions such as the number of days in the year of sunshine and the levels of annual precipitation (rainfall) are favorable for a flourishing agriculture in Ghana. Also, for the size of its population, agricultural land, measuring 126,037.4 square kilometers as at 2021 according to World Development Indicators (WDI) of the World Bank, puts Ghana in a position of being able to achieve massive agricultural production.
Resetting Ghana’s External Sector
It also called for the resetting of Ghana’s external sector by changing the ownership structure of the country’s two major merchandize exports.
It said Ghana’s merchandize export, which has been the main driver of the merchandize trade and current account balances, has had little effect on the strength of the cedi relative to foreign currencies.
Between 2017 and 2019, average merchandize exports stood at US$14.815 billion.
The trade and current account balances, on average, also stood at US$1.751 billion and –US$1.970 billion respectively during the period.
Average depreciation rate of the cedi against the US dollar stood at 8.7% during the period. In 2020-2021, average merchandize exports declined by US$215 million to US$14.600 billion. This drove the average merchandize trade balance to worsen by US$180 million to US$1.571 million and the average current account balance to worsen by US$368 million to -US$2.338 million.
IFS stressed that the cedi does not largely respond to the behavior of merchandize export and its impact on trade and current accounts, at least within the period under consideration.
It added that the main variable under capital and financial account of the balance of payments the government of Ghana has been using to manage the cedi is international borrowing.
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