According to research firm Fitch Solutions, it forecasts that Ghana will record a current account surplus of 1.3% of GDP in 2023, from a deficit of 2.1% of GDP in 2022 – the first time in 20 years that Ghana records a full-year current account surplus.
However, in 2024, the current account balance will slip back into deficit to a shortfall of 0.2% of GDP, as imports recover while exports will record sluggish growth due to a projected moderation in global gold and cocoa prices.
The agency notes that trade surplus will remain large by historical standards in H2 2023, as imports will contract more sharply than exports due to weak domestic demand.
Indeed, merchandise imports contracted by 13.0% y-o-y in H123 as a result of weak domestic demand and lower global commodity prices. Meanwhile, exports fell by 7.2%, pushing up the trade surplus to USD299.6mn, from USD245.7mn in H122.
Data released by the Bank of Ghana (BoG) shows that the overall current account balance posted a surplus of USD0.8bn in H123, compared to a deficit of USD1.1bn in the corresponding period of 2022.
“We expect that the trade surplus will remain large by historical standards in H223. Imports will continue to contract as domestic conditions remain weak.
“Indeed, inflation – which averaged 46.2% y-o-y in H123 – will remain elevated over the coming months, averaging 40.6% through 2023, the highest annual rate since 1996. This will weaken purchasing power of households and constrain demand for imported consumer products,” stated Fitch Solutions.
“Meanwhile, restrictive monetary conditions will curtail the ability of businesses to fund their growth initiatives and will lead to a delay in corporate expansion plans, limiting demand for imported capital inputs.
“Furthermore, we believe that global oil prices will average roughly USD80 per barrel (/bbl) in H223, below the USD93/bbl in H222, deflating Ghana’s import bill (mineral fuels account for 5-10% of total imports). All told, we project imports to contract by 10.0% in 2023, from growth of 7.3% in 2022,” added Fitch Solutions.
