Ghana’s share of total imports from industrialized economies went up in the first and second quarters of 2021 compared to a year ago.
According to data from the Bank of Ghana, 44.3 percent of all imports in the second quarter of the year came from industrialized economies. This is lower than a share of 34.4 percent in the corresponding period last year.
Similarly, imports from these economies in the first three months of 2021 were higher than the corresponding period a year ago. In the first three months of 2020, only 38.4 percent of the country’s total imports came from industrialized economies. This, however, increased significantly to 44.1 percent in the corresponding period this year. This may signal the strong rebound of the global economy as supply chains begin to strengthen.
Ghana’s major trading industrialized economies include Germany, France, Italy, Japan, Netherlands, UK, and the USA.
Exports to industrialized economies
A critical look at the data show that exports to these economies continue to decline as compared to the country’s imports.
Ghana’s exports to these countries declined between 2019 and 2020. In 2019, 37.7 percent of the country’s exports went to these countries but this reduced to 30.1 percent last year.
Between January and March this year, 47.5 percent of the country’s Exports went to these economies compared to 44.1 percent of imports. However, exports declined in the second quarter to 28.6 percent as compared to imports of 44.3 percent.
The recent data from the Bank of Ghana show that total exports currently stand at US$7593.2 million at the end of June 2021. Gold recorded the best performance in the first six months of the year, roping in a total of US$2666.7 million at End-June 2021. Earnings from Crude oil amounted to US$1757.1 million whilst cocoa earning amounted to US$ 1741.8 million.
On the other hand, total imports currently stand at US$6755.6 million in June 2021. Out of this, oil imports amounted to US$1210.8 million whilst Non-Oil Imports was US$5544.8 million. The low imports compared to exports, resulted in an improvement of the trade balance.
A trade balance US$837.50 million at the end of June, currently accounting for 1.2% of the country’s GDP, up from 0.3% in January.
Cause for concern
Whilst the overall trade balance has improved, trade with industrialized economies alone show that Ghana’s balance is in deficits. The relatively low exports to these economies as compared to imports may mean that Ghana is not taking full advantage of the trade partnerships that it has with these economies.
Ghana signed trade Agreements with the UK and the EU that is supposed to have created a huge market for our exports. Since the world economy continues to open up gradually, Ghana must make efforts to add value to some of its raw materials before export.
To take advantage of these trade agreements, the country must also place emphasis on diversifying its exports. There is the need to increase the production of the country’s non-traditional export commodities to limit the risk of price fluctuations in the Oil market.
This is because, aside bringing in revenues, trade surplus can help strengthen the country’s currency relative to other currencies. A high demand for the country’s exports push up prices and lead to a direct strengthening of the domestic currency.
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