Ghana’s trade surplus will narrow to $1 billion in 2022, Fitch Solutions has said in its forecast.

This will appear on the back of rising consumer-driven import growth, while falling oil and cocoa production will temper export growth.

It is also coming despite crude oil trading at about $97 on the world market.

“Our Oil and Gas team forecast a 1.9% decline in oil production volumes in 2022, as a result of recent low exploration activity and continued investor uncertainty following very low prices in 2020, stemming from the Covid-19 pandemic. This will keep production below pre-pandemic levels, and which will subsequently weigh on goods exports – oil represented 23.2% of total exports in 2020”, Fitch Solutions said in its Country Risk Report.

“Moreover, our Agribusiness team forecast a 3.5% decline in cocoa production, largely as a result of base effects, as well as structural issues such as such as labour problems and fragmentation, with cocoa swollen shoot virus presenting a further downside risk to forecasts”, it pointed out.

As cocoa exports made up 16.6% of exports in 2020, Fitch Solutions said this will also weigh on export growth.

“Although, we anticipate stronger gold production and prices in the coming year, this will not be enough to offset the aforementioned factors. Indeed, we forecast export growth will come in at 9.4% in 2022, below the 2010-19 average of 12.4%”.

The expected reduction in the trade surplus could affect the country’s balance of payment and the value of the local currency.

Tourist arrivals to remain stronger

It also said the widening of the external account position will be tempered by stronger tourist arrivals, narrowing the services trade deficit.

“We forecast that service exports will increase by 25.1% in 2022, as headwinds to global travel and tourism fade. While we also anticipate increased demand for imported business and financial services as a result of the continued recovery of the domestic economy, this will still see the services deficit narrow from $4.8 billion in 2021 to $4.3 billion in 2022”.

"We also expect that the secondary income balance will increase, as economic activity in developed markets continues to strengthen, which will support the incomes of Ghanaians living abroad, and by extension foreign remittances to Ghana”, it added.

Import to surpass 10 year average

Meanwhile, import growth will surpass its pre-crisis 10 year average.

“While Ghana’s vaccine rollout remains slow, with only 9.9% of the population have been fully vaccinated, as Ghana obtains more vaccines through COVAX and the African Vaccine Acquisition Trust we expect that Covid-19 related social distancing restrictions will be loosened. In turn, this will result in a rebound in domestic demand, and increase demand for consumer imports – as we expect private consumption growth of 4.7% in 2022, up from 3.8% in 2021”.