The financial and economic data published by the Bank of Ghana (BoG) this month has revealed that gold and cocoa were major export earners in first half of 2023 as oil export receipts slump.
Gold remains Ghana’s major export earner and contributor to GDP. At the end of June this year, gold export receipts amounted to approximately US$3.46 billion which represents 14.2% (US$431 million) increase of the US$3.03 billion recorded in the first half of 2022. The increase in export earnings was driven by the increase in gold export volumes as well as the rise in prices of the precious metal. Gold prices increased year-on-year by 5.7% with a year-to-date change of 8.1% closing in June at US$1,942.1/oz. The performance of the precious metal has largely been driven by the relatively stable US dollar and interest rates, event risk hedging and continued central bank demand.
In the second half of 2023, gold performance is predicted to see a greater upside if recession risk increases. The World Bank forecasts the price of gold to average US$1,900/oz at the end of 2023 after previously pegging it at US$1,700/oz.
Source: Bank of Ghana
Cocoa export receipts rose by 4.7% (US$66.7 million) to US$1.50 billion in the first half of 2023 from US$1.42 billion recorded in the same period in 2022 but below the US$1.8 billion receipts recorded in the first half of 2021. The year-on-year increase in export receipts is occasioned by the upward trend of cocoa prices in the global market. Cocoa prices have jumped by 31.2% year-on-year averaging US$3,185.3/tonne in June with a year-to-date change of 25.5%. Bad weather conditions resulting in flooding in main cocoa growing areas in Cote d’Ivoire have raised concerns of an impending supply deficit leading to the rise in prices of the commodity in the global market.
Source: Reuters, Bank of Ghana
Oil export receipts however significantly declined year-on-year by 41.3% (US$1.17 billion) in the first half of 2023. Total oil export receipts dropped from US$2.83 billion in the first half of 2022 to US$1.66 billion in the first half of this year. The drop in export receipts is explained by the reduction in the country’s oil production and the downward trend of international oil prices due to drop in global demand.
Ghana’s oil production decreased in the first half of 2023 by 13% to 22.45 million barrels (bbls) from the 25.9 million bbls produced in first half of 2022. From the Bank of Ghana data, brent crude oil prices averaged US$75/bbl at the end of June this year, a decrease of 36% year-on-year. Based on global developments, annual brent crude price is expected to average US$84/bbl according to the World Bank initially setting it at US$88/bbl.
The declining crude oil output and prices are likely to have negative implications on the government’s annual petroleum revenue unless new upstream development at the Jubilee field lead to a significant rise in oil output in the second half of the year. Petroleum revenue for the first half of the year has dropped to US$540.5 million from US$746.8 million recorded in first half of 2022. This year the government projected a benchmark crude oil output of 52.61 million bbls and benchmark crude oil price of US$88.55/bbl. However, considering both local and global developments in the oil and gas industry, these benchmark values are expected to be revised in the 2023 mid-year budget statement of the government.
According to the BoG data, oil imports (crude, gas, refined products, and other oil products) also witnessed a drop by 12.6% from US$2.22 billion in first half of 2022 to US$1.94 billion within same period this year.
Finally, the country’s total export receipts for the first half of 2023 decreased by 8% year-on-year to US$8.2 billion. Total imports reduced by 13.4% year-on-year to US$6.4 billion resulting in a trade surplus of US$1.8 billion for the first half of 2023 representing 2.4% of GDP.