If you are yet unaware of the economic crisis which Ghana is facing, I have written about it here and I have explained the government’s response to the crisis here. The summary is that the government is facing difficulty in raising funds from creditors due to its huge debt and the large disparity between public expenditure and public revenue. Compounding these problems are the costs of goods and services rising at a level not seen in a decade.

One of the ways in which countries get out of such crises is through rapid economic growth. If the GDP (a measure of the value of goods and services produced in a year) is rising at a rapid rate, creditors are confident that the country would be able to meet its debt obligations in the long run and will be more willing to lend to the country. With this financing, the country will be able to meet public expenses, invest in development projects, and pay off maturing debt.

It is good news therefore, that the Ghana Statistical Service released 2021 GDP figures showing a growth rate of 5.4%, above the 5% target that the government had expected as per the 2022 budget statement. Agriculture grew by 8.4%, industry declined by 0.8% and services grew by 9.4%. Industry’s decline can be attributed to the 12.5% decline in the GDP of the oil sector for 2021. The services sector now makes up nearly 50% of the value of the whole economy, while industry has steadily declined from around 35% to now making up 30% of the economy.

Decent GDP numbers are far from a guarantee that Ghana can get out of the economic pain that it currently is in, but what it adds to the equation is a level of confidence in the ability of the economy to recover. Every drop of confidence is crucial in a country with such a large outstanding debt and for which default is not an impossible scenario. In the long-run structural changes may be what matters but as John Maynard Keynes famously said, “in the long-run we are all dead.” And so for now, we will consider the 2021 growth rate as a step towards improving the economic conditions.