1.

Use this case study to answer

Changes in the Ghanaian economy

Table 1.1 Ghana fact file 2024

Indicator	Value
Gross Domestic Product (GDP)	$190bn
Population	34m
Tertiary sector’s share of GDP	55%
Inflation rate	11%

Ghana, a lower-middle-income country in West Africa, has experienced steady economic growth over the past two decades. The structure of its economy has changed significantly. While the country continues to rely on exports of cocoa beans and gold, the tertiary sector – particularly banking, tourism, and telecommunications – now contributes more than half of GDP. Investment in mobile technology and digital services has allowed Ghana to expand financial inclusion, bringing more people into the formal banking system. Tourism has also grown as visitors are attracted to Ghana’s natural reserves and cultural heritage.

Despite this progress, Ghana faces serious macroeconomic challenges. The inflation rate rose to 11% in 2024, mainly because of rising food and fuel prices. Higher costs of living have forced many households to reduce saving and borrow more from banks. Lenders have expanded credit to consumers and firms, but some economists worry that this may increase financial risks if interest rates rise further. At the same time, the government faces high levels of public debt, and a large proportion of tax revenue is used to pay interest on loans.

The government has tried to address health concerns by introducing an indirect tax on sugary drinks. Supporters of this policy argue that it will reduce sugar consumption, improve public health, and lower long-term healthcare costs. However, producers warn that the tax will raise production costs, reduce output, and harm employment in the soft drinks industry.

Living standards in Ghana have improved: life expectancy has risen and poverty rates have fallen. Yet the Human Development Index (HDI) remains lower than in some other middle-income countries. Critics argue that while GDP per head is increasing, improvements in education and healthcare are not keeping pace.

Table 1.2 GDP per head and HDI in selected countries, 2024

Country	GDP per head (US$)	HDI
Ghana	5 600	0.64
Thailand	7 800	0.80
Kenya	5 100	0.59
Brazil	10 200	0.76
UK	47 000	0.93