Agriculture drives GDP

A rare push from agriculture boosted Ghana’s GDP growth to 6.7 percent in the first quarter compared to 4.9 percent in the last quarter of 2013.

Agriculture, which remains the economy’s main source of jobs, has experienced relatively slow growth since 2010 -- raising concerns about the sector’s ability to keep up with the rate of population growth.

But data issued this week by the Ghana Statistical Service showed agriculture expanding at an annual rate of 12.7 percent between January and March, its quickest pace in four years.

The Ghana Statistical Service (GSS) attributed the robust growth to good performances in livestock production and fishing activities. Livestock production increased by 25.7 percent during the quarter and fishing activities rose by 20 percent.

Output from services rose by 4.6 percent year-on-year in the period, while industry shrunk 1.1 percent from a year ago. Financial services output, which quickened by 20 percent in the period, also contributed to the strong growth of quarterly GDP.

Government is targetting economic growth of 8 percent in 2014 compared with a 4.75 percent projection by the International Monetary Fund (IMF), which has called for more short-term austerity to raise Ghana’s medium-term economic prospects.

The Fund said growth this year will be stymied by high cost of credit, the falling currency and rising inflation, which set a four-year record in the first quarter of 2014. According to the GSS, inflation registered 14.8 percent in May, from 13.5 percent in December.

Producer inflation, which measures price increases from the perspective of companies, also accelerated to 33.1 percent in May, from 31.3 percent the month before, the GSS announced. On month-on-month basis, prices jumped by 1.3 percent.

With both producer and consumer inflation gaining by the month, the strong expansion of GDP represents a rare piece of good news on the economy and could potentially improve the outlook for tax revenues.

The Ministry of Finance has stressed its resolve to cut the budget deficit again this year, to 8.5 percent of GDP from 10.1 percent in 2013, as it targets a more sustainable level of 6 percent of GDP by 2016.