Dr. George Domfe writes: “my first love letter to Hon. Ato Forson – exchange rate effect is the reason for the” huge” increase in Ghana’s nominal GDP

By Fiifi Malik August 3, 2026

The reported increase in Ghana’s nominal GDP from about US$82.3 billion in 2024 to about US$114.2 billion in 2025 requires careful interpretation within the broader context of macroeconomic measurement. While the figures suggest a substantial expansion of the economy, the underlying dynamics indicate that a significant portion of this increase reflects exchange rate effects rather than a corresponding increase in real economic activity.

Given that Ghana recorded a real GDP growth rate of approximately 6% in 2025, a simple adjustment of the 2024 GDP figure based on real growth alone would have resulted in a nominal dollar value of roughly US$87.2 billion, assuming a STABLE EXCHANGE RATE. Therefore, the additional increase to US$114.2 billion cannot be attributed solely to improvements in the production of goods and services. Rather, it is largely influenced by the appreciation of the Ghana cedi against the United States dollar during the period.

Ghana’s GDP is initially calculated in domestic currency (cedis), reflecting the value of economic activities produced within the country. However, for international comparisons, the cedi-denominated GDP is converted into US dollars using the prevailing exchange rate. Consequently, when the cedi appreciates significantly against the dollar, the dollar value of GDP automatically rises, even if the underlying real economic expansion remains unchanged.

For instance, in 2024, the exchange rate was above GH¢15 to US$1, while in 2025 it moved closer to GH¢11 to US$1 [on average]. This appreciation means that the same level of economic output measured in cedis would translate into a much higher dollar value.

The same exchange rate effect partly explains the increase in Ghana’s reported GDP per capita, which rose from approximately US$2,419 in 2024 to about US$3,385 in 2025.

Furthermore, this valuation effect has important implications for fiscal indicators, particularly the debt-to-GDP ratio. The appreciation of the cedi increases the dollar value of GDP when converted for international reporting, thereby expanding the denominator used in calculating the debt-to-GDP ratio. This contributed to the reported decline in the ratio from about 61.8% in 2024 to approximately 44% in 2025. THIS DOES NOT REDUCE THE ‘REAL’ DEBT STOCK!

Additionally, the same exchange rate dynamics also affect the measurement of public debt stock when quoted in dollars. While Ghana’s debt stock is largely assessed in both cedi and foreign currency terms, the appreciation of the cedi can create differences in reported figures depending on the currency of measurement. For example, Ghana’s public debt increased from approximately US$49.3 billion in 2024 to about US$61.3 billion in 2025, reflecting, among other factors, changes in exchange rate valuation and additional borrowing.

Therefore, while the growth in Ghana’s dollar-denominated GDP and the decline in the debt-to-GDP ratio are important indicators, they should not be interpreted in isolation as evidence of a dramatic transformation in the productive capacity of the economy. A comprehensive assessment must distinguish between real economic growth, which reflects increased production and productivity, and nominal valuation effects, which are influenced by inflation and exchange rate movements.