• About
  • Advertise
  • Privacy Policy
  • Contact
Wednesday, January 8, 2025
  • Login
The Vaultz News
  • Top Stories
  • News
    • General News
    • Education
    • Health
    • Opinions
  • Economics
    • Economy
    • Finance
      • Banking
      • Insurance
      • Pension
    • Securities/Markets
  • Business
    • Agribusiness
    • Vaultz Business
    • Extractives/Energy
    • Real Estate
  • World
    • Africa
    • America
    • Europe
    • UK
    • USA
    • Asia
    • Around the Globe
  • Innovation
    • Technology
    • Wheels
  • Entertainment
  • 20MOBPL2DNew
  • Jobs & Scholarships
    • Job Vacancies
    • Scholarships
No Result
View All Result
The Vaultz News
  • Top Stories
  • News
    • General News
    • Education
    • Health
    • Opinions
  • Economics
    • Economy
    • Finance
      • Banking
      • Insurance
      • Pension
    • Securities/Markets
  • Business
    • Agribusiness
    • Vaultz Business
    • Extractives/Energy
    • Real Estate
  • World
    • Africa
    • America
    • Europe
    • UK
    • USA
    • Asia
    • Around the Globe
  • Innovation
    • Technology
    • Wheels
  • Entertainment
  • 20MOBPL2DNew
  • Jobs & Scholarships
    • Job Vacancies
    • Scholarships
No Result
View All Result
The Vaultz News
No Result
View All Result

Ghana’s Increasing Trade Deficit to Hamper Its Economic Recovery Prospects

August 21, 2023
Stephen M.CbyStephen M.C
in Economy, One Top Story
0
Ghana’s Increasing Trade Deficit to Hamper Its Economic Recovery Prospects

The whole economic conversation last week was centered on Ghana’s widening trade deficit as the West African country tries to resuscitate its ailing economy. However, despite these efforts, the recovery process could meet a real stumbling block – trade deficit, which has the tendency of denting government’s economic growth prospects.

The balance of trade is a key indicator of a nation’s health. In general, investors and market professionals appear more concerned with trade deficits than trade surpluses, since chronic deficits may be a precursor to a currency devaluation.

However, a temporary trade deficit may be viewed as a necessary evil, since it may suggest the economy is growing strongly and needs imports to maintain the momentum – that is not Ghana’s case now.

RelatedPosts

President Mahama Delivers Inauguration Speech

Ghana’s Q1 Budget Approval to Shape the Stock Market and FDI Trends- Analyst

Ghana Missing on the List of Top 10 African Countries Leading in Private Sector Investments

This led economists and experts predicting that trade could chop off huge points from Ghana’s gross domestic product this year, unless imports reverse course, a tall order given the persistent strength in domestic demand. A strong dollar and slowing global demand could curb exports.

The more the terms of trade worsens, it will bring down third-quarter estimates of real GDP growth closer to the stall speed where bad things can happen and the economy can stumble and go over the cliff.

The number one culprit for Ghana’s trade deficit is increased government spending. An increase in government spending usually leads to a country’s savings diminishing, increasing the trade deficit.

Moreover, a change In the strength of Ghana’s currency – the cedi, can impact the trade deficit. When a country’s currency weakens relative to other nations, trade between those countries becomes more costly. If a country’s currency is strong, it may want to import more goods or services.

Impacts of a Trade Deficit on the Economy

The more Ghana’s trade deficit rises and imports of goods rebound while exports of products decline, a trend that if sustained, can result in trade being a drag on economic growth in the second half of the year.

In the case of Ghana where the trade deficit is caused by a large amount of importing from another country, that can leave the country at the mercy of the exporting country’s foreign trade policy or supply chain issues. This situation is a potential security threat to the country.

In a time that graduate unemployment is on the rise, cost of borrowing is high and companies are folding up due to unfriendly operating environment and energy cost, as Ghana imports more than it exports, unemployment may increase. For example, if Ghana shifts from manufacturing cars to importing cars from international car manufacturers, the job market for car manufacturing will be negatively impacted.

Trade deficits can put downward pressure on a Ghana’s currency value due to increased demand for foreign currencies to pay for imports. In this instance, the strong dollar plays a key role in the overall situation.

To navigate these grueling effects of trade deficit on the Ghanaian economy and the populace, the government must start an effective industrialization campaign to produce certain goods domestically. Ghana as a country cannot continue importing everything and expect a new result.

It can be recalled that Ghana’s trade report showed that Ghana faced a trade deficit of GH¢4.5 billion in 2022 as imports soared to GH¢148.6 billion, overshadowing exports at GH¢144.1 billion.

According to the report, the nation’s trade landscape saw Europe taking the lead as the primary trade partner, accounting for 35% of exports and 39% of imports. This put pressure on Ghana’s reserve, leading to the weakening of the cedi and other devastating consequences to the local economy.

However, there is a silver lining in the country’s current uncomfortable situation as Fitch Solutions projects that Ghana’s balance of payments will shift into a surplus for the years 2023 and 2024.

Nonetheless, Fitch Solutions hinges its projections on a reversal in Ghana’s capital and financial account for 2023, driven by anticipated disbursements of $600 million each from the International Monetary Fund under the Extended Credit Facility.

READ ALSO: Artist That Already Have Negative Tags On Their Brands Shouldn’t Behave Otherwise – Kojo Kinn

Tags: economic growth prospectsexportsFitch SolutionsGhana’s Increasing Trade Deficit Could Dent Its Economic Recoveryimportstrade

Related Posts

President Mahama Delivers Inauguration Speech
General News

President Mahama Delivers Inauguration Speech

January 7, 2025
Exclusive: Ignorance, Major Reason for Low Women Participation in Forex in Ghana- Gifty Annor-Sika
One Top Story

Ghana’s Q1 Budget Approval to Shape the Stock Market and FDI Trends- Analyst

January 6, 2025
Ghana Missing on the List of Top 10 African Countries Leading in Private Sector Investments
Economy

Ghana Missing on the List of Top 10 African Countries Leading in Private Sector Investments

January 4, 2025
Net interest income of Banks Grow By More Than 12% in the First 4 Months
Banking

Capital Adequacy Ratio Hits 14.3% With Reliefs; 22% of Banks Still Struggling

January 3, 2025
Cedi Ends Last Week Stronger In Retail Markets Amid Interbank Dip
One Top Story

Cedi Gains Momentum with 1.44% Appreciation Against the Dollar Amid Waning Yuletide Demand

December 31, 2024
Ghana's Inflation Still High Despite Significant Drop- IEA's Latest Analysis
Economy

Ghana’s Monetary Policy Framework In It’s Current State, A ‘Glaring Failure’

December 30, 2024

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Previous Post

Artist That Already Have Negative Tags On Their Brands Shouldn’t Behave Otherwise – Kojo Kinn

Next Post

North Korea’s Kim Supervises Cruise Missile Test

Sign up for The Vaultz analytic wire

Get weekly news analysis from top editors at The Vaultz and stay informed on trending economic and business issues from across the globe.
slide 2 of 6
President Mahama Delivers Inauguration Speech
General News

President Mahama Delivers Inauguration Speech

by Felix Aneba AwonosuaJanuary 7, 2025
Constitutional Framework: Former Chief Justice Recalls for a Constitutional Review
General News

Constitutional Framework: Former Chief Justice Recalls for a Constitutional Review

by Felix Aneba AwonosuaJanuary 8, 2025
Barker-Vormawor Criticizes Gender Imbalance in President-Elect’s Transition Team Appointments
General News

Oliver Barker-Vormawor Calls for Unity, Accountability in Post-Akufo-Addo Era

by Evans Junior OwuJanuary 8, 2025
President John Dramani Mahama
Extractives/Energy

Mahama to Battle Massive Looming Load Shedding 

by Prince AgyapongJanuary 8, 2025
Donald Trump Jr Visits Greenland
Europe

Donald Trump Jr Visits Greenland

by Comfort AmpomaaJanuary 7, 2025
Bank of Ghana Releases List of Authorized FX Brokers for 2025
Banking

Bank of Ghana Releases List of Authorized FX Brokers for 2025

by Stephen M.CJanuary 7, 2025
President Mahama Delivers Inauguration Speech
General News

President Mahama Delivers Inauguration Speech

by Felix Aneba AwonosuaJanuary 7, 2025
Constitutional Framework: Former Chief Justice Recalls for a Constitutional Review
General News

Constitutional Framework: Former Chief Justice Recalls for a Constitutional Review

by Felix Aneba AwonosuaJanuary 8, 2025
slide 1 to 6 of 6
Constitutional Framework: Former Chief Justice Recalls for a Constitutional Review
Barker-Vormawor Criticizes Gender Imbalance in President-Elect’s Transition Team Appointments
President John Dramani Mahama
Donald Trump Jr Visits Greenland
Bank of Ghana Releases List of Authorized FX Brokers for 2025
President Mahama Delivers Inauguration Speech
Snow
FIND OUT MORE

The Vaultz News

Copyright © 2021 The Vaultz News. All rights reserved.

Navigate Site

  • About
  • Advertise
  • Privacy Policy
  • Contact

Follow Us

No Result
View All Result
  • Top Stories
  • News
    • General News
    • Education
    • Health
    • Opinions
  • Economics
    • Economy
    • Finance
      • Banking
      • Insurance
      • Pension
    • Securities/Markets
  • Business
    • Agribusiness
    • Vaultz Business
    • Extractives/Energy
    • Real Estate
  • World
    • Africa
    • America
    • Europe
    • UK
    • USA
    • Asia
    • Around the Globe
  • Innovation
    • Technology
    • Wheels
  • Entertainment
  • 20MOBPL2D
  • Jobs & Scholarships
    • Job Vacancies
    • Scholarships

Copyright © 2021 The Vaultz News. All rights reserved.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In