Analyzing the Impact of Fluctuating Oil Prices on Ghana’s Diverse Economic Landscape

Abstract

This research project discusses how the fluctuating prices of oil in the economy take their toll on different economic sectors, particularly gold mining, cocoa and farming in Ghana. The main objective of this study is understanding the link between the oil price and growth in GDP, evaluating linkages across sectors, and thereafter, proposing policy interventions. This study is unique because current studies do not adequately consider the relationship between oil price dynamics and multiple economic sectors in Ghana; thus, it provides a much-needed contribution to literature in this respect. The study theorizes that there has been a relationship between oil prices, exchange rates, inflation, unemployment rate, and interest rates that would impact GDP growth by using OLS regression models. The results of the study indicate that oil price and exchange rate are the significant determinants of GDP growth, while the former has a positive relationship; the latter has a negative one. The study concludes that while oil prices form a critical element in economic performance, their impact is mediated by other factors, particularly at higher price levels. Some policy recommendations are offered to cushion against such adverse shocks of oil price.