Economy now worth GH¢112 billion

The Ghana Statistical Service (GSS) has released the final GDP figures for 2014, which show the country’s pace of economic expansion grew by 4%, down from a previous estimate of 4.2% and making it the lowest economic growth recorded in the last six years.

The data by the GSS revealed that the annual GDP estimate for 2014 at current prices was GH¢112,610.6million, while that for 2013 was GH¢93,415.9million. In constant terms, the 2014 annual GDP was estimated at GH¢33,539.7million.

The corresponding figure for 2013 was GH¢32,237million. However, the country’s per capita GDP is now pegged at GH¢4,165.

For quarter on quarter bases, the economy grew by 1.2 percent for just the fourth quarter of last year. This however represents a marginal reduction of 2.6 percent recorded in the third quarter of 2014.

The figures released by the GSS show a massive slowdown of industry due to the power crisis, while the pace of activities in the agriculture and services sectors also decelerated, reflecting the economy’s general ill-health.

Industry, which expanded by 6.6% in 2013, virtually stagnated in 2014 with growth of 0.9%. Services growth declined from 10% in 2013 to 5.7% in 2014, while the growth of agriculture slowed from 5.7% to 4.6%.

The slowdown in economic growth is expected to continue, with overall GDP projected to rise by only 3.5% in 2015 by the International Monetary Fund (IMF). The underperforming economy increases concerns about jobs and the survival of firms battling low demand and surging costs.

It also drums home the urgency of resolving the three-year old energy crisis, which has exacerbated other economic problems such as high inflation and a falling currency.

Dr. Philomena Nyarko, Government Statistician, announcing the figure in Accra at a media briefing explained that 4% is the final growth for 2014 after it projected a 4.2 percent growth when it gathered about 70 percent of data for calculating the GDP estimates.

“The indications are that there were lower import volumes in 2014 than earlier estimated. Marine fishing output also declined considerably,” Dr. Nyarko said.

It is evident that the energy crisis and instability of the macro-economic indicators have taken a huge toll on economic activities, with consumer and business confidence at its lowest.

The last time the country’s GDP growth fell below five percent was in 2009, when the economy grew at 4 percent. Since then the economy has been growing considerably, recording 7.3 percent in 2013.

Many business leaders have met the GDP figures as announced by the Ghana Statistical Service with disappointment, and said they mark a significant decline from the optimism of 2011 when growth appeared set to move into double-digits.

In 2011 Ghana’s GDP growth of 13.6 percent was regarded as the fastest in the world, on the back of having starting commercial production of oil the previous year.

The IMF has projected that non-oil GDP for the country will expand by 2.3 percent, the lowest in more than a decade.

The figure is below the 2.7 percent forecast by government this year, and reflects the severe energy supply challenges and implementation of a tight fiscal stance proffered by the IMF following approval of a three-year budgetary support programme for Ghana.

Already, government has cut its oil revenue expectations by GH¢2.7billion while the emergence of large fiscal and external imbalances -- compounded by severe electricity shortages -- have put the country’s prospects at risk and make this year one of the toughest for businesses and people engaged in economic activities.

The IMF Executive Board has approved a three-year arrangement under the Extended Credit Facility (ECF) for the country in a deal that involves US$918million in support of government’s medium-term economic reform programme.

The programme aims to restore debt sustainability and macroeconomic stability to foster a return to high growth and job-creation, while protecting social spending.

Government is confident that involvement of the IMF in implementing its austere economic policy will help encourage donor countries to release held-up funds to the national Treasury, and put the economy back on the path of growth.

But some analysts have opined 2015 will also be a difficult year, as the government -- which has projected a GDP growth of 3.9 percent -- begins to implement austere policies aimed at tackling the country’s wide budget deficit of 9.8 percent.

The energy supply deficit, which has resulted in load-management of power, also appears far from over in spite of starting commercial gas production to feed the thermal plants of the country’s main power generators -- VRA and Asogli.

Government’s revenue target is also a concern to policymakers, as it is feared the slump in oil prices on the world market will affect the budget programme.