Business News of 2012-10-09

Ghana’s economic value now at GHS 71 bn

Elorm Desewu Ghana’s economic output or value, also known as its Gross Domestic Product (GDP), has reached approximately GHS 70 billion in 2012 from a low record of GHS 30 billion recorded in 2008. Although the Ghana Statistical Service (GSS), says there was a lower rate of growth from 14.4 percent to 7.1 percent in 2012, the Deputy Minister of Finance Seth Terkper argues that this is not a sign of a sluggish or stagnating economic performance. This is because the economy has over doubled in the pace of four year due to the rebasing of the economy. It stands to reason that the quantum of growth at 7.1 percent on a larger GDP base is significantly higher than the lower GDP base. According to the Deputy Minister, Ghana’s recent growth rates outpace the African average (which is positive) and against a more sluggish growth performance in the advance and emerging economies. Examining the GDP at the current market prices by economic activity, the agricultural sector recorded a value of GHS 15,547 million in 2012 compared to GHS 8,875 million recorded in 2008, the industry sector recorded a value of GHS 18,592 million in 2012 compared to 5,855 million recorded in 2008 and the service sector recorded a value of GHS 33,237 million in 2012 compared GHS 13,935 million recorded in 2008. The net direct taxes also increased to GHS 4,470 million in 2012 from GHS 1,514 million. He noted that the fact that the services and industrial sectors of the economy were outpacing agriculture in recent years (including 2007 and 2008) does not mean that the government was discouraging agricultural activities in the countries. He cited the performance of the cocoa sector and the boost given to agriculture from policies as the buffer stock and fertilizer subsidy schemes to buttress his point. This, he said, clearly shows that Ghana’s economy is noting stagnation adding that on the contrary, if you look at global growth figures, you take Europe, you take the US, where the IMF is lowering growth figures, and you pick growth figures from sub-Saharan African average, including oil producing countries in sub-Saharan Africa, Ghana’s growth performance is positive, more positive than any of these economies. In reaching their conclusions, the Deputy Minister urged analysts to consider alternative views on the Ghanaian economy and data on GDP growth rates from sources such as the Center for Policy Analysis (CEPA). Nonetheless, the Government wishes for faster growth rates as well as diversified and value addition economy, in line with its accelerated development strategy—which is also the theme of recent budgets. Hence, in addition to the power projects, the government has put in place key measure to improve the agricultural sector which includes the Savanna Accelerated Development Authority (SADA) project in five regions up north, and the proposed irrigation and the Volta basin projects under the CDB and other facilities. These are all aimed at improving the agricultural sector and industrial sectors. Provisional estimates for 2012 showed a growth of 7.1 percent over the 2011 revised estimates. The Services sector, which is also the largest sector, recorded the highest growth of 8.8 percent, followed by Industry (7.0%), with Agriculture recording the lowest growth of 2.6 percent. Though the estimates show an improvement in the growth of the Agriculture sector compared to 2011 (0.8%), its contribution to the economy continues to decline, with its share reducing from 25.6 percent of GDP to 23.1 percent. Crops, however, remains the largest activity in the economy with a share of 19.3 percent of GDP. Industry, the second largest sector with a share of 27.6 percent, declined in growth from a record high of 41.1 percent in 2011 to 7.0 percent in 2012. Decline in crude oil production, coupled with slow growth in manufacturing and production and distribution of water, contributed to the drastic reduction in the growth of the sector. The Services sector remains the largest, contributing about half (49.3%) to GDP. Five of the activities in this sector recorded growth rates above 10 percent. These sectors are: Hotels and Restaurants; Transport and Storage; Financial Intermediation; Information and Communication; and Business Services.