Ghana economy grows 5.4% in 2021

Ghana's economy showed resilience in 2021, with a growth rate of 5.4% for the year, marking the fastest growth rate in two years. In the fourth quarter alone, the economy expanded by an impressive 7%. Professor John Gatze, Dean of the School of Business at the University of Cape Coast in Ghana, highlighted the key drivers behind this growth in a recent interview with CNBC Africa. According to Professor Gatze, the main drivers of the economic growth were the services sector, improvements in the industry sector, and agriculture. These sectors have remained consistent in driving the Ghanaian economy's growth. As the country continues its recovery from the impacts of the COVID-19 pandemic, it is essential to focus on sustainable growth that benefits all levels of society. The International Monetary Fund (IMF) and the World Bank have linked Ghana's economic challenges to high debt levels and poor financial management. Despite the positive growth projections for the country, reaching a double-digit growth rate remains a significant challenge. Professor Gatze emphasized the need for improved financial and debt management, strategic infrastructure investments, and a focus on agriculture to unlock Ghana's growth potential. He also stressed the importance of sustainable growth over short-term gains, highlighting the need for inclusive growth that creates jobs, enhances revenue generation, and addresses employment issues in the country. In terms of policy implications, Professor Gatze cautioned fiscal authorities against misinterpreting the growth numbers to justify increased borrowing. While Ghana's debt-to-GDP ratio may improve with higher growth rates, the burden of interest payments and other obligations remains a significant concern. As Ghana's economy continues to recover, policymakers must prioritize policies that benefit the average Ghanaian household, especially amidst rising costs of living and economic uncertainties. While specific data on the middle class in Ghana is not readily available, there are concerns about a potential shrinkage in this segment of society. The cost of living has sharply increased, impacting individuals across various social strata. Bankers, public sector employees, and unemployed individuals alike are feeling the strain of higher expenses and economic challenges. Professor Gatze emphasized the need for policymakers to translate GDP growth figures into tangible improvements in people's livelihoods and well-being. The focus should not just be on headline growth numbers but on inclusive and sustainable development that benefits all segments of Ghanaian society.