Economy Slows Down

Ghana’s economy slowed during the third quarter of 2011 though it recorded 12 percent growth during the period.

Provisional estimates released by the Ghana Statistical Service (GSS) indicate that real Gross Domestic Product (GDP) eased from a revised 17.6 percent in the second quarter as oil production missed target.

Buoyed by oil production, industry recorded the highest growth rate of 37.2 percent followed by the services and agriculture sectors, which recorded growth rate of 5.8 and 5.2 respectively compared to 9.2 and 2.9 percent recorded in the second quarter of 2011.

The slow growth recorded by the services and agriculture sectors is expected to bother policy makers and economists.

With regard to industry, the high growth rate according to the acting Government Statistician, Dr. Philomena Nyarko was mainly influenced by crude oil production in the mining and quarrying subsector, which grew by 263.1 percent.

The construction sector recorded 25.9 percent growth while electricity recorded 11.9 percent growth.

However, the manufacturing sector once again recorded a negative growth rate of 15.4 percent.

The Association of Ghana Industries (AGI) has blamed the performance of the sub-sector on high cost of production mainly due to increase in fuel prices, high lending rates and difficulties in accessing credit.

In the services sector, seven out of 11 sub-sectors recorded positive growths.

They included transport (10.3 percent), communication (24.1 percent), business services (63.1 percent), public administration (11.8 percent), education (9.4 percent) and health (3.8 percent).

Trade, hotels and restaurants, finance and insurance and personal services recorded negative growth rates during the period.

Net indirect taxes also recorded a negative growth rate.

There was strong growth in crops production in the agriculture sector but fishing and forestry declined.

In November 2011, Dr. Kwabena Duffuor, Finance and Economic Minister stated that economic growth was likely to slow to 9.4 percent in 2012 compared to 13.6 percent recorded in 2011.

The Central Bank kept its benchmark interest rate unchanged at 12.5 percent for a third meeting on December 21.

“The Bank of Ghana (BoG) may keep the rate on hold again in February before the government’s 2012 budget spending plans take a greater effect,” Stephen Bailey- Smith, an emerging-markets strategist at Standard Bank in London told Bloomberg.

In 2010, the economy recorded a 7.7 percent growth rate. Per capita income of the country was however $1,343 or GH¢1,907 while the economy was revalued at GH¢46.232 billion or $32.558 billion.

The GDP was measured using 2006 as the reference year while the estimates were compiled with all the three approaches namely production, expenditure and income.

Provisional growth for 2011 was however estimated at 13.6 percent.