Ghana’s position unchanged on Global Competitiveness Index due to high fiscal deficit, macroeconomic instability

Ghana is still ranked at 114th out of 142 economies on the World Economic Forum’s (WEF) Global Competitiveness Index (GCI) report 2011-2012 released today September 7, 2011.

Ghana scored 3.6 out of the overall 7 points. The index measures the productivity of a country.

Although the country gained one position in a constant sample, Ghana’s current position is the same as last year (2010-2011) and last two years (2009-2010) on the index.

According to the report, Ghana is suffering from macroeconomic instability, high fiscal deficits and building up significant debt.

“Ghana suffers from macroeconomic instability (it is ranked a low 139th in this pillar), with the government running high fiscal deficits and building up significant debt; the country is also experiencing high, albeit improving, inflation,” said the WEF which has been publishing the index since 1979.

The index however indicates that the “country continues to display strong public institutions and governance indicators with relatively high government efficiency, particularly in regional comparison.”

It notes that some aspects of the country’s infrastructure are also good by regional standards, particularly the state of its ports which was ranked 66th. The country’s financial markets, described as relatively well developed is ranked at 61st.

On the other hand, education levels continue to lag behind international standards at all levels, labour markets continue to be characterized by inefficiencies, and the country is not harnessing new technologies for productivity enhancements (ICT adoption rates are very low), the GCI observed.

Giving specifics under the macroeconomic environment of the country, the index remarks that government’s budget balance to gross domestic product is -7.7%, gross national savings to GDP was 14.6 and an annual rate of inflation change is 10.7%.

Ghana’s interest rate spread was 12.2 %, general government debt to GDP was 41.2%. The country scored 37.7 on credit rating between 0–100.

Switzerland topped the overall rankings with Singapore overtaking Sweden for the  second position.

Northern and Western European countries dominate the top 10 with Sweden (3rd), Finland (4th), Germany (6th), the Netherlands (7th), Denmark (8th) and the United Kingdom (10th). Japan remains the second-ranked Asian economy at 9th place, despite falling three places since last year.

The United States continues its decline for the third year in a row, falling one more place to the 5th position.

Tunisia was Africa’s most ranked country on the index securing the 40th position followed by South Africa and Rwanda placing 50 and 70 respectively.

The results show that while competitiveness in advanced economies has stagnated over the past seven years, in many emerging markets it has improved, placing their growth on a more stable footing and mirroring the shift in economic activity from advanced to emerging economies, said Jennifer Blanke, Senior Director and Lead Economist at WEF.

By Ekow Quandzie