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48
The Ghanaian Economy
Ghana enjoys stable macroeconomic conditions and
relative peace which are a
sine qua non
for sus-
tained development.
Overview
Ghana’s macroeconomic performance has in re-
cent times been positive. This level of performance
has been engendered by the prevalence of relative
peace coupled with private sector competitiveness;
human resource development; good governance
and civic responsibility. The sound macro-economic
management along with high prices for gold and co-
coa helped sustain GDP growth in 2008 and 2009.
Ghana is therefore considered a beacon of hope for
Africa as it continues to champion the course of good
governance and sound economic management.
Economic Growth
Ghana’s economy is seeing significant progress
which is underlined by the relative political stability
and macroeconomic reforms. The improvement in
the economy has engendered an influx of foreign
investments of various forms as well as a gradual
increase in middle-class professionals.
Contribution to GDP
Although Ghana’s economy has for a long time been
dominated by the agricultural sector, the industrial
and services sectors are developing with increased
political stability and government support. At the
end of 2009, the composition of GDP on a sector
by sector basis denoted that agriculture constituted
33.6%, industry 25.1% and services 41.2%. These
contributions to economic growth are expected to
continue to improve especially with the discovery
of major offshore oil reserves in Ghana. Aside this,
the determination of the government to develop an
integrated oil industry alongside existing industries
like agriculture and mining is also largely expected
to boost the economy. Presented in the table below
are the key macro-economic variables for Ghana
from 2004 to 2009.
Cost of Living
Inflation has been on a downward trend since it
peaked at 20.7% in June 2009. This fall in inflation,
according to the Monetary Policy Committee of the
Bank of Ghana, has been driven by both non-food
and food inflation.
Inflation as at January 2010 was 14.78%, it reduced
marginally to 14.22% in February 2010 and then to
13.2% in March 2010. Ghana recorded its lowest in-
flation for the last decade in the month of June 2010
at the rate of 9.52% and this is expected to reduce
further as the Government pursues its policies to
achieve the set target range of 7% - 11% by the end
of the year. The diagram on the next page shows the
trend of inflation from January 2009 to June 2010.
The table on the next page indicates forecast infla-
tion rates for the years 2010 to 2013.
Bank of Ghana Policy Rate
and Interest Rates
The policy rate has been on a steady decline for the
2010 fiscal year. Fiscal tightening and the relative sta-
GDP at market prices (US$bn)
GDP per capita: market prices (US$bn)
Real GDP growth (%)
Population (millions)
Consumer price inflation (Average)
Bank of Ghana Prime Rate (%)
Average exchange rate (GH¢/USD)
2004
8.8
433
5.8
20.4
12.6
18.5
0.905
2005
10.6
509
5.8
20.9
15.2
15.5
0.913
2006
12.4
581
6.2
21.4
10.9
12.5
0.924
2007
15.0
683
5.7
22.0
10.7
13.5
0.970
2008
16.7
739
7.3
22.5
16.5
17.0
1.214
2009
14.8
639
4.5
23.1
19.3
18.0
1.391
Source: Bank of Ghana Annual Report 2008, Ministry of Finance Website & KPMG Analysis
Shaded Portion: IMF Estimates (World Economic Outlook Database, October 2009)
Macro-Economic Indicators