Economic growth rate down to 3.2%
It’s the worst in 24 years
By Isaac Aidoo
Ghana’s revised growth rate of 3.2 per cent for 2016 will go down in history as the lowest ever recorded since 1992, Business Finder’s analysis has revealed.
The revision of the country’s growth outlook contained in government’s 2017 -2019 budget preparation guidelines published on the website of the Ministry of Finance was on account of a reduction in targets for oil and gold production.
The communication on the website said, “In 2016, overall GDP is expected to grow by 3.2 percent, while non-oil GDP (excluding oil and gas) is expected to grow by 3.8 per cent. These developments have taken into consideration the release of revised GDP figures for 2015 (by the GSS); revision of gold production forecasts for 2016-18; and the shut-down of the FPSO Kwame Nkrumah.”
Prior to going to press, Business Finder noticed the absence of the information from the Ministry’s website.
This paper’s checks revealed a ‘subtle’ withdrawal of the 126-page document (in PDF) following Bloomberg’s recent publication of a story using its contents.
Ghana’s economy according to the Ghana Statistical Service (GSS) has for over two decades experienced a mixed growth pattern. The country’s economic growth slowed for the fourth consecutive year to an estimated 3.9 per cent in 2015 from 4 per cent in 2014 as energy rationing, high inflation, and ongoing fiscal consolidation weighs on economic activity.
Source: Ghana Statistical Service
Economists say the drastic revision in growth from the projected 5.4 per cent in the 2016 budget statement is worrying as it has bad prospects for job creation and macro-economic stability.
“The revision is shocking because it goes against the expectation that after three consecutive years of declining GDP growth, we thought growth was finally set to take off again in 2016,” says Economist and Research Fellow, Mr Leslie Mensah.
According to him, lower GDP growth means lower prospects for job creation and casts doubts on the impact of Ghana’s programme with the International Monetary Fund (IMF).
The estimated 5.4 per cent growth for this year was on the back of expected recovery of the macro-economy and the commencement of production at the TEN oil fields.
According to the economist, “growth is critical and important for the continuing strength of the economy and is necessary for job creation.”
The IMF, World Bank and other development partners reckon that government’s major challenge is to avoid slippages from its ongoing fiscal consolidation programme in the light of the upcoming general elections late this year.
In the view of Mr Mensah, the expectation was that “if fiscal consolidation is becoming entrenched and macro-economic indicators are beginning to pick up then growth should follow suit.”
The Institute for Fiscal studies (IFS) has recently lamented the lack of attention of the IMF programme to growth, job creation and poverty reduction.
Economist, Dr John Kwakye of the Institute called for government’s fiscal policy (under the IMF programme) to pay due attention to growth and poverty-reduction issues.
“The Institute particularly calls for concrete interventions to support agriculture and manufacturing which have the potential to generate jobs,” Dr Kwakye told the media in Accra recently.