Ghana’s economy is not expected to experience any change in its structure in the medium term, 2021 to 2024, as the government expects the services sector to remain as the dominant sector in terms of percentage contribution to overall national income, followed by Industry and Agriculture.
The services sector has been the dominant sector in the Ghanaian economy over the years. As a result, the sector is projected to grow at an average rate of 5.1 percent over the medium-term. Specifically, the government forecasts the sector to grow by 5.6 percent, 4.9 percent, 4.8 percent, and 5.1 percent in 2021, 2022, 2023, and 2024, respectively.
The Finance Ministry stated in the 2021 Budget Statement that it expects the growth in the services sector to be driven by a continued strong growth performance in the Information and Communication subsector. The subsector is expected to play a significant role in the country’s medium term growth as it was forecast to record an average growth of 9.3 percent from 2021 to 2024.
Hotel and Restaurants sub-sector
However, sub-sectors such as Hotel and Restaurants still struggles to find its feet, contracting 4.4 percent in the first quarter of 2021.
This notwithstanding, the Finance Ministry expects the Hotels and Restaurants subsector to recover gradually from the severe contraction it experienced in 2020. The subsector is expected to register a growth of 2.0 percent in 2021, 4.0 percent in 2022, 6.2 percent in 2023, and 6.5 percent in 2024.
Meanwhile, the government continues to roll out significant policies and programs to champion its digitization agenda to modernize transactions between citizens and the state. More recently, the government launched a convergent digital platform, Ghana. Gov, which has brought together government services and payment onto one platform. All these steps by the government and the adoption of technology by most of the businesses in the country will further strengthen the sector.
Growth forecast
The Ghanaian economy is forecast to expand by 5 percent on average between 2021 and 2024, with projected growth of 5.0 percent, 5.0 percent, 5.1 percent, and 4.9 percent in 2021, 2022, 2023 and 2024 respectively. Meanwhile, the economy expanded 3.1 percent in the first quarter of 2021, far below the first quarter growth of 7.0 percent in 2020. The growth of the economy in the first quarter was driven by Construction (14.2%), Manufacturing (6.1%) and ICT (22.1%). It was, however, lower than the 3.3 percent expansion recorded in the fourth quarter of 2020.
As a result, the recent growth cast doubts on the government’s growth forecast of 5 percent this year. An Economist and Finance Lecturer, Dr. Lord Mensah, believes it will be very difficult for the economy to even expand up to 4 percent this year. However, the Ghana Statistical Service is yet to release its second quarter GDP figures.
Moreover, a Global Rating Agency, Fitch Solutions, earlier this month, indicated that its monitoring of economic activity in the country points to a strong second quarter growth. So, with three more quarters to go, it is still possible that the country can record its 5 percent growth forecast for 2021. But, a third wave of COVID-19 may pose some risks to the outlook compounded by the recent vaccine nationalism. Ghana’s economy Ghana’s economy Ghana’s economy
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