Ghana’s current account deficit to narrow to 1.9% in 2023 – EIU

Ghana’s current account deficit is expected to narrow to 1.9% of Gross Domestic Product in 2023, UK-based Economist Intelligence Unit has revealed.

It is also forecasting a further drop in the current account to 1.1% in 2024 as international prices for refined fuel imports decline from their 2022 peak, whilst contracting domestic demand in 2023 and more stringent regulations on imports suppress the import bill.

The deficit will however widen in 2025-27, reaching 2.7% of GDP in 2027, as the primary income deficit grows.

“Although export earnings from gold and cocoa (which are among Ghana’s major commodities) will rise, revenue from oil exports will fall in 2023-24 as oil prices decline from peak 2022 levels, narrowing the trade surplus”, it explained.

EIU continued that the trade surplus will widen in 2026-27 as growth in export receipts, driven by a strong rise in oil and gold output, exceeds growth in the import bill.

Services account to remain in deficit

The services account will also remain in deficit in 2023-27, given the expenditure on technical services for hydrocarbons and mining projects.

However, the deficit will narrow gradually as a proportion of GDP as the tourism sector recovery picks up in 2025-27.

Primary income deficit to rise

Also, the primary income deficit/GDP ratio will rise in 2023, reflecting rising profit repatriation (especially by gold firms), and fall in 2024. It will then rise again in 2025-27 as repatriation by oil and mining companies increases in line with new projects coming on stream.

Additionally, the secondary income account will continue to post large surpluses, buoyed by inflows of workers’ remittances. The deficit will be primarily financed by short-term borrowing.