Ghana’s Gold and Oil export receipts jumped in 2022 whilst Cocoa export receipts declined.
For decades, Ghana has been a commodity dependent country relying heavily on export revenues from the three major trading commodities: gold, cocoa and oil (since production commenced in 2011). Gold for decades remains the leading commodity export earner for the country. The Bank of Ghana’s summary of financial and economic data released in January show that in 2022, total export receipts from the precious metal amounted to US$6.61 billion representing a 30% increase year-on-year but a 2.8% decrease of the US$6.8 billion recorded in 2020 at the height of the COVID pandemic.
Data source: Bank of Ghana
The recent increase in export receipts can be largely attributed to the increase in production and export of gold especially from the small-scale mining sector. In a recent press briefing, the Minister of Lands and Natural Resources revealed that gold exports by small scale miners have risen sharply by over 500% from 3,429.91oz in 2021 to 22,158.250z in 2022.
Gold price in 2022 experienced a downswing after a steady rise between January and March where it peaked at US$1947.83/oz. Covid-19 lockdowns in China impeded consumer access to retail outlets, and interest rate hikes by central banks especially the US Federal Reserve to curb inflation all affected gold demand causing the price of gold to take a slight hit. Gold price averaged US$1797.55/oz in December which is 0.4% year-on-year increase. Annual gold price averaged US$1801/oz in 2022, which is 1.5% over the World Bank’s forecasted price of US$1775/oz for the year. According to the World Bank’s commodity price forecast for 2023, the price of the metal is expected to average US$1700/oz. However, Fitch Solutions expects gold price to gain ground rising to an average of US$1,850/oz as bond yields and the US dollar peak.
Data source: Bank of Ghana
After a 35% decline in crude oil export receipts in 2020 due to COVID-19 pandemic-induced-shocks, the country’s oil export earnings have recorded an upward trend, rising above pre-pandemic levels. Oil export receipts for 2022 stood at $5.43 billion, representing a 38% increase year-on-year. The increase in oil export receipts has been as a result of the oil price hikes considering the decline in the country’s oil production volumes.
In January 2022, brent crude oil price averaged US$85.53/bbl rising to a highest monthly average of US$120.08/bbl in June. Annual crude oil price averaged US$100/bbl in 2022, representing a 42% increase year-on-year. For 2023, annual crude oil (brent) is expected to average US$88/bbl and US$95/bbl based on projections by the World Bank and Fitch Solutions respectively.
Ghana’s oil imports (crude, gas, refined products, and other oil products) on the other hand also rose sharply to US$4.70 billion in 2022 from US$2.72 billion in 2021. The difference between the oil exports and imports resulted in a positive trade balance of about US$0.73 billion.
Ghana’s cocoa export (cocoa beans and products) receipts however declined as compared to the two other commodities. Export receipts of the cash crop in 2022 decreased by 22% year-on-year to US$2.2 billion, 5.3% below the pandemic level of US$2.33 billion. The decrease in export earnings can be attributed largely to the decline in the country’s cocoa production. Cocoa production decreased from 1.4 million MT recorded in the 2020/2021 season to 683,000 MT in the 2021/2022 crop season. The drop in production of the crop was occasioned mainly by the escalating sale of cocoa farms for mining activities and illegal mining (galamsey) activities which have resulted in the cutting down of cocoa trees. Other factors include unfavorable climate conditions, and the shortage and high cost of fertilizers partly induced by the Russia-Ukraine conflict.
In 2022, cocoa recorded an annual average price of US$2,393/tonne representing a 1.4% decline year-on-year. The price of the crop is expected to average US$2340/tonne and US$2051.8/tonne by World Bank and Fitch Solutions respectively.
Data Source: World Bank