How Ghana can boost trade prospects

Data from the Ghana Statistical Service reveals a significant shift in the country's trade balance, with a trade surplus of about 200 million Ghana Cedis recorded in the first half of 2023. This marks a stark contrast from the previous year's trade deficit of 400 million Ghana Cedis. The country's Producer Price inflation has also seen a decline to 9.5 per cent in October. To delve deeper into the implications of these numbers and the strategies Ghana is employing to bolster its economy, Kweku Arkoh-Koomson, an Economic Analyst at Data Bank, joined CNBC Africa for a comprehensive discussion. Analyzing the data, Arkoh-Koomson highlighted the impact of fluctuating oil prices on Ghana's trade dynamics. While the surge in oil prices in 2022 led to a favorable export environment due to increased prices of refined petroleum, it also escalated import costs. However, the subsequent dip in oil prices in 2023 is expected to affect both export values and import expenditures. Additionally, the surge in cocoa prices coupled with projected production declines in Ghana have contributed to a decrease in the country's total exports. Arkoh-Koomson emphasized the role of key commodities such as oil and cocoa, which account for 60 per cent of Ghana's total exports, in shaping the trade balance. The shift from a deficit to a surplus can be attributed to a combination of these factors, alongside currency depreciation. Regarding Ghana's trading partners, Arkoh-Koomson noted that while European and Asian countries dominate the trade relations due to their position in the value chain, there is ample room for Ghana to leverage initiatives like the African Continental Free Trade Area (AFTA) to expand exports within the African subregion. With opportunities to enhance export volumes to ECOWAS nations and beyond, Ghana is poised to diversify its trade portfolio. A crucial aspect discussed was the focus on value addition in Ghana's exports. Acknowledging the country's position at the lower end of the value chain, Arkoh-Koomson shed light on policy initiatives aimed at boosting value addition in the agricultural and manufacturing sectors. Programs like Planting for Food and Jobs emphasize enhancing value in agricultural products, while tax reforms seek to facilitate processing and production activities, particularly in sectors like cocoa and gold. As Ghana's Monetary Policy Committee convenes to deliberate on monetary policy decisions, Arkoh-Koomson shared insights on the expected outcomes. With inflation hovering around 35.2 per cent and policy rates at 30 per cent, the Central Bank is likely to maintain its current rates to allow inflation to align with policy rates. Upholding the commitment to combat inflation as per the IMF agreement, the Central Bank is expected to tread cautiously to sustain the inflation downtrend. In conclusion, Ghana's evolving trade landscape reflects a mix of global economic shifts and domestic policy endeavors. As the country navigates through trade dynamics and inflation management, strategic initiatives aimed at enhancing value addition and diversifying trading relationships are poised to play a pivotal role in shaping Ghana's economic trajectory.