Unravelling the Tapestry: Understanding the Factors Shaping Current Account Imbalances in Ghana

Samuel Yeboah

MPRA Paper from University Library of Munich, Germany

Abstract: This research aims to unravel the factors shaping current account imbalances in Ghana, with a focus on understanding the underlying causes and implications for the country's economic stability. The study explores the multifaceted nature of these imbalances by examining structural factors, exchange rate dynamics, monetary policy, external factors, and capital flows. It identifies limited diversification of the economy, inadequate infrastructure, and low productivity levels as significant structural constraints that hinder Ghana's ability to reduce import dependency and achieve a more balanced current account. Furthermore, it highlights the role of currency depreciation, inconsistent monetary policies, and inflationary pressures in contributing to trade imbalances and capital flight, exacerbating current account deficits. The study also considers external factors such as commodity price fluctuations, global trade patterns, and regional integration, which can influence Ghana's current account imbalances. Additionally, it explores the implications of these imbalances for external debt sustainability, terms of trade, and overall economic performance. The research provides policymakers and stakeholders with valuable insights into the factors driving Ghana's current account imbalances, informing the formulation of effective policy measures to address these imbalances and promote sustainable economic development.

Keywords: Current account imbalances; Ghana; Trade deficit; Balance of payments; Structural factors; Diversification of the economy; Infrastructure; Productivity levels; Exchange rate dynamics; Monetary policy; Currency depreciation; Inflationary pressures; External factors; Commodity price fluctuations; Global trade patterns; Regional integration; Capital flows; Foreign direct investment; Portfolio investment; External debt sustainability; Terms of trade; Economic performance (search for similar items in EconPapers)
JEL-codes: F32 F41 F43 F47 O11 O16 (search for similar items in EconPapers)
Date: 2023-04-18, Revised 2023-06-06
New Economics Papers: this item is included in nep-afr and nep-opm
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