Crude oil production and macroeconomic performance in Ghana

Abstract

AbstractThe objective of this study was to investigate the impact of crude oil production on macroeconomic performance in Ghana. The study employed monthly data from January 2011 to December 2018. The structural vector autoregressive model was employed to analyse the impact of crude oil production on macroeconomic performance. The findings of the structural impulse response function revealed that crude oil production had no impact on the agricultural sector, services sector, exchange rate and inflation. However, crude oil production had a negative and positive impact on the manufacturing sector and fiscal balance, respectively. The findings imply that the government through Ghana National Petroleum Corporation (GNPC) and other major oil stakeholders should establish oil refineries, petroleum industries and fertiliser plants domestically to provide a forward linkage for the non‐oil sectors. Also, the government through the Ministry of Trade and Industry should develop the services sectors to meet international standards to provide a backward linkage to the oil sector and ensure the integration of the sectors into the oil industry. The government needs to intensify measures to make the manufacturing sector recover from the adverse effect of the production of crude oil.