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- GDP (PPP):
- $121.7 billion
- 3.5% growth
- 5.7% 5-year compound annual growth
- $4,412 per capita
- Inflation (CPI):
- FDI Inflow:
Ghana’s economic freedom score is 56.0, making its economy the 122nd freest in the 2018 Index. Its overall score has decreased by 0.2 point, with lower scores for the property rights and labor freedom indicators outweighing improvements in judicial effectiveness, government spending, and fiscal health. Ghana is ranked 19th among 47 countries in the Sub-Saharan Africa region, and its overall score is above the regional average but below the world average.
Although Ghana’s economy thrived for decades under relatively sound governance and a competitive business environment, it has suffered in recent years from the consequences of loose fiscal policy, high budget and current account deficits, and a depreciating currency. The heavy burdens of state regulation and political favoritism undermine overall competitiveness. A cumbersome bureaucracy dissuades potential entrepreneurs and impedes optimal economic performance. Corruption remains unchecked by selectively enforced reform measures.
Formed from the British colony of the Gold Coast and the Togoland trust territory in 1957, Ghana became the first sub-Saharan country to gain its independence. Initially turbulent politically, it has been a stable democracy since 1992. In December 2016, President John Dramani Mahama of the National Democratic Congress lost his bid for reelection to Nana Akufo-Addo of the New Patriotic Party, marking the third time that the presidency has changed parties since the return to democracy. Ghana is Africa’s second-biggest gold producer and second-largest cocoa producer. It is also rich in diamonds and oil. In recent years, plunging oil prices have precipitated an economic crisis. A border dispute with Côte d’Ivoire centers on ownership of maritime oil fields.
Weak rule of law, corruption, and an underregulated property rights system are significant impediments to business. Entrepreneurs starting a business commonly encounter demands for bribes. Obtaining clear title to land is complicated and time-consuming. Although the judiciary is independent, scarceness of resources compromises and delays the judicial process, and poorly paid judges may be tempted by bribes. Political corruption is a persistent problem.
The top personal income and corporate tax rates are 25 percent. Other taxes include value-added and capital gains taxes and a national health insurance levy. The overall tax burden equals 20.1 percent of total domestic income. Over the past three years, government spending has amounted to 26.5 percent of total output (GDP), and budget deficits have averaged 8.2 percent of GDP. Public debt is equivalent to 72.4 percent of GDP.
The overall process for establishing and running a business is cumbersome, but the new government has announced plans to make it easier to conduct business. Labor regulations remain restrictive and outmoded. Child labor, in particular, is an ongoing problem. The government faces increasing pressure to reform and cut subsidies to loss-making state-owned enterprises in the energy sector.
Trade is significant for Ghana’s economy; the combined value of exports and imports equals 89 percent of GDP. The average applied tariff rate is 10.0 percent. Nontariff barriers impede trade. Government openness to foreign investment is above average. The financial sector has undergone privatizations, but banking is undercapitalized, and access to financing remains limited despite recent progress.