Ghana’s trade deficit has risen to the highest level in three years as exports declined while imports made significant gains, reflecting weaker export sales worsened by the fall in commodity prices on the world market, official data released last week have shown.
According to figures from the Bank of Ghana, the trade deficit for last year widened by 137.9 percent over the 2014 figure to US$3.84billion (about 10.6 percent of GDP), making it the worst trade gap recorded in the country since 2013 when the deficit reached a similar value.
And this was only after a drop in oil and gas imports.The central bank records show that last year the country exported US$10.1billion worth of commodities (mainly gold, cocoa and oil) to the world market, while it imported goods valued at US$14billion with demands on non-oil products driving the imports bill.
It is thus anticipated that the steady rise in the country’s trade deficit will leave the Mahama administration with a headache, and will likely renew calls for further action to tame Ghanaians’ appetite for foreign goods while implementing policies to specifically boost exports.
Finance Minister Seth Terkper, when he appeared before Parliament in November last year to present the government’s 2016 budget and economic statement, noted that the country’s deteriorating trade position is a result of falling commodity prices (gold, cocoa and oil) coupled with decreased production of all the major export commodities resulting in a low turnout of exports.
But some economists argue that while the commodity price crash has affected the country’s merchandise export trade position, the falling crude oil prices has helped the country to keep its trade deficit in check as the highly demanded petroleum bill shrunk from US$3.54billion in 2014 to US$2billion in 2015.
Additionally, depreciation of the cedi and the strong dollar — which left businesses with little appetite to order more imports — combined to take some steam out of the economy.
In 2015 the value of non-oil imports reached US$11.9billion amid increased demand for foreign produce, as economic growth braked sharply as a result of the energy supply deficit that brought the manufacturing sector to its knees.
Demand for imports was particularly evident in the last six months of 2015, when the trade deficit increased from US$473.4million in the first quarter to US$1.5billion in the last three months of the year.
A number of economists are now worried that the trade balance warning lights are flashing — if not red then certainly amber, since depreciation of the cedi has failed to ignite demand for Ghanaian exports.