"The Country Risk Atlas provides comprehensive analysis and insights into economic, political, business environment and sustainability factors that influence trends in non-payment risk for companies at a macroeconomic level. It aims to be a companion for businesses and investors in making informed decisions by identifying potential risks and opportunities in 84 different economies, along with the map we produce quarterly for all the 241 countries and territories we monitor," states Ana Boata, Head of Economic Research at Allianz Trade.

In 2023, the global economy showed resilience in spite of several global shocks

In its first Country Risk Atlas, Allianz Trade reveals that it upgraded[1] 21 country risk ratings in 2023 while downgrading only 4. The upgraded countries showcased their resilience to global shocks. The trend is totally different from that of 2022, when Allianz Trade upgraded only 8 country risk ratings while downgrading 17.

"In 2022, our country risk ratings were largely influenced by the repercussions of the war in Ukraine. But in 2023, the global economy has shown a certain resilience against one of the most aggressive global monetary policy tightening cycles and in the face of some major global shocks. As such, we have upgraded 21 economies' risk ratings, equivalent to around 19% of the global GDP. Africa has seen the most upgrades (10), followed by Europe (6), while only China and Uruguay have seen their country risk trajectories improve in Asia and the Americas, respectively. However, Africa remains the continent with the greatest difficulties in terms of liquidity and access to international markets at a time when liquidity risk is increasing almost everywhere. Against this backdrop, the current cycle and enduring fiscal and monetary policy efforts may trigger further upgrades in the Americas, with Africa and the Middle East most likely to fall behind," adds Ana Boata.

Overall, when looking at the average of all of Allianz Trade's country risk ratings, the global risk of non-payment for companies in 2023 stands slightly above 2 (Medium Risk), stable compared to 2022 and almost back to 2019 levels. Regionally, Africa's average risk rating stands above 3 (Sensitive), while the Middle East, Latin America and Eastern Europe (incl. Russia) are close to but below 3 (Sensitive). Asia Pacific is slightly above 2 (Medium) and Western Europe and North America are close to 1 (Low).

Ghana's economic growth faces challenges, but positive outlook ahead

According to the Allianz Trade's Country Risk Atlas, Ghana's economic growth has experienced a decline in recent years. This was also highlighted in the Allianz Risk Barometer 2024 as published by Allianz Commercial, which ranked Macroeconomic developments as the most concerning business risk in Ghana. However, the country's commitment to reform and its potential as a trade and logistics hub for West Africa offer hope for a brighter future.

Economic challenges and slowdown

In 2022, Ghana's economic growth was impacted by a sovereign crisis, resulting in a decrease in activity. This trend continued in 2023, with an estimated growth rate of only +1.5%. This brings the pace of economic growth close to the record low of +0.5% experienced in 2020. The non-extractive industries were particularly affected, facing a significant downturn due to falling corporate and consumer confidence, as well as challenging external conditions. The non-extractive sector grew at an average rate of around +1% in 2022-2023, the slowest pace since the 1980s. Additionally, the value of the Cedi dropped by -50% between 2022 and early 2023.

Steps towards recovery

To address these challenges, Ghana reached an agreement with the International Monetary Fund in mid-May 2023. This agreement marked the first step towards a comprehensive debt-restructuring process involving the G20 group, including China, as well as domestic creditors. The agreement has helped contain currency depreciation since its implementation. While inflation is expected to remain elevated throughout 2024, the central bank has taken measures to stabilize the situation. It has increased its policy rate and extended the reserve requirement to enhance financial stability, albeit at the expense of credit growth. Interest rates are expected to decline visibly in the second half of 2024.

Outlook and potential

Despite the current economic challenges, Ghana's long-term potential remains promising. Growth is predicted to remain muted in the coming years, with inflation returning to single digits in 2025. Starting in 2026, growth is expected to rise towards its long-term potential of about +5%. The extractive industry, including oil and gas production and new gold mines, is expected to contribute to this growth. Ghana's export basket, which includes gold, crude oil, and cocoa, provides some mitigation against negative terms-of-trade shocks resulting from overreliance on commodities.

Looking ahead, several factors could challenge the country risk landscape, leading to more downgrades in 2024.

Among the major risk factors identified by Allianz Trade for 2024 are:

    Liquidity constraints in an environment of high public and private debt and high interest rates.
    Below-potential growth in most regions and lower pricing power for corporates, which will drive revenue growth downwards.
    Rising business insolvencies (+8% globally in 2024), with Europe and the US leading the acceleration.
    Changes in global supply chains, which could take a toll on countries with twin deficits, mainly on current account balances.
    Increasingly polarized geopolitics in a packed election year, with economies accounting for 60% of global GDP heading to polls.

Find out more and discover all our country risk profiles and ratings in the Country Risk Atlas!