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- GDP (PPP):
- $74.9 billion
- 13.6% growth
- 8.0% 5-year compound annual growth
- $3,083 per capita
- Inflation (CPI):
- FDI Inflow:
Ghana’s economic freedom score is 61.3, making its economy the 77th freest in the 2013 Index. Its overall score is 0.6 point better than last year due to improvements in investment freedom, the control of government spending, and fiscal freedom. Ghana is ranked 7th out of 46 countries in the Sub-Saharan Africa region, and its overall score has risen above the world average.
A notable economic growth rate of 8 percent over the past five years has been supported by strong improvements in economic freedom, with reforms focused on spurring private sector–led development. Institutions that enhance economic growth are becoming more efficient and effective, supported by stable macroeconomic policies and ongoing reforms. The new president’s commitment to continued reform will be crucial in improving Ghana’s economic health and freedom.
Despite significant progress, obstacles do remain, and particular institutions need development and reform. Property rights are poorly protected, and high levels of corruption persist due to overall weakness in the rule of law. Tackling these issues will be necessary if rapid growth is to be maintained.
The first country in colonial Africa to gain its independence, Ghana has been a stable democracy since 1992. Long-time opposition candidate John Atta Mills was elected president in December 2008 but passed away in 2012, and former Vice President John Dramani Mahama has succeeded to the presidency. Considered a regional model for political and economic reform, Ghana has achieved strong growth through sound macroeconomic management. The country is rich in natural resources, including gold, diamonds, manganese ore, and bauxite, and oil production began in 2010. High prices for gold and cocoa helped to sustain economic growth from 2008–2011. The industrial sector (about 30 percent of GDP in 2007) is more developed than in many other African countries, yet agriculture is the economic pillar and in 2007 accounted for 50 percent of employment and 39 percent of exports.
The judicial system is subject to political influence and suffers from corruption, albeit to a somewhat lesser extent than elsewhere in the region. The courts are slow to dispose of cases and face challenges in enforcing decisions, largely because of resource constraints and institutional inefficiencies. New President Mahama has called for “decency and dignity” in politics.
The top income and corporate tax rates are 25 percent. Other taxes include a value-added tax (VAT), a national health insurance levy, and a capital gains tax. The overall tax burden amounts to 12.1 percent of total domestic income, and government spending has fallen to the equivalent of 39.8 percent of GDP. The budget is in deficit, and public debt remains slightly over 40 percent of total domestic output.
The business start-up process has become less burdensome, taking only seven procedures, but obtaining necessary permits takes 218 days and costs over four times the level of average annual income. Despite ongoing efforts to modernize the labor code, much of the labor force remains in the informal economy. The government influences prices through state-owned utilities. Persistently high inflation has created pressure for dollarization.
The trade-weighted average tariff rate remains quite high at 8.6 percent, and non-tariff barriers further impede trade. The state generally does not discriminate against foreign investors except in key sectors, but the overall investment regime lacks efficiency and transparency. The financial sector has undergone privatizations, but the banking sector is undercapitalized, and access to financing remains limited.