Ghana generates over 80% of its export revenues from three primary commodities – gold, crude oil and cocoa exports. It is classified by UNCTAD as commodity dependent, making it vulnerable to sharp drops in commodity prices.
Since the COVID-19 pandemic demand for oil dropped precipitously due to a sudden reduction in industrial production, trade, travel, and movement of freight. Prices fell dramatically as a result.
Revenues from the newly established oil and gas industry have had a profound impact on Ghana’s macroeconomy, even though oil and gas accounted for just 3.8% of Ghana’s GDP in 2018.
Cocoa, a key ingredient in chocolate, a luxury food product, has also seen a decline in demand. Ghana is the second largest cocoa bean supplier globally, with an estimated 1 million Ghanaian smallholder farmers and their communities depending directly on cocoa for their livelihoods.
The only commodity that did well of Ghana’s main exports was gold. The country is the largest gold producer in Africa . Demand – and the price – of gold increased.
Ghana achieved strong economic growth in terms of real GDP in the 2000s and reached lower middle-income status in November 2010. Middle-income countries generally have a diversified economic structure but Ghana remains heavily dependent on primary commodity exports for foreign exchange earnings.
As a result the impact of the fall in the price of oil and cocoa has been severe. Ghana’s credit rating was downgraded to B- in September 2020 and the International Monetary Fund approved the disbursement of US$1 billion to improve confidence of the country’s creditors. At the end of 2020, GDP growth was confirmed at 0.9% .