Ghana's president warns of triple threat to economy

By Peter Griffiths

LONDON (Reuters) - Ghana's economy faces a triple threat from a decline in trade, foreign aid and remittances from overseas workers, the West African state's President John Atta Mills said on Thursday.

While its two main exports, gold and cocoa, have held up "reasonably well" compared to other commodities, Mills warned that Ghana's economy would not escape the pain of the downturn.

"The economic downturn will result in very, very serious repercussions for our economy," he said in a speech in London. "Already we are seeing signs of a reduction in remittances from abroad. We also expect a decline in donor support (and) a decline in trade."

The former British colony is the world's second biggest cocoa exporter and Africa's second-largest gold producer.

Although prices for these commodities have fared better than most during the downturn, Ghana is struggling with a current account deficit that stood at 20.9 percent of GDP in 2008.

Ghanaians living abroad send home about $3 billion each year, almost a fifth of the gross domestic product.

The government said in March that declining remittances would put more pressure on the country's cedi currency. It has already lost more than 30 percent of its value against the dollar in the past year.

Mills, a former university professor who came to power in January after one of the closest elections in African history, warned that the discovery of oil and gas in Ghana was no guarantee of prosperity.