Growth, inflation shoot up

Ghana’s economy grew by a robust 7.9 percent in 2012, according to fresh data from the Ghana Statistical Service (GSS) -- which also said GDP growth was 15 percent in 2011 instead of a previously estimated 14.4 percent.

The services sector led the expansion with 10.2 percent growth, while industrial output increased by 7 percent and agriculture by 1.3 percent. The figures revealed a sharp slowdown in industry -- which grew by 41.1 percent in 2011 due to the initial impact of oil production -- and the continued strength of services output, which increased by 8.3 percent.

Agriculture however remained weak as growth was barely 0.5 percentage points better than the 0.8 percent recorded in 2011. This shows that the sector has grown by a meagre 2.2 percent between 2010-2012, heightening worries about food security, employment-creation and farmers’ incomes as close to 50 percent of the labour force is involved in agriculture. Construction and electricity production were the chief drivers of growth in industry, with expansion rates of 11.2 percent and 11.1 percent respectively.

Manufacturing and mining/quarrying both jumped by 5 percent, while water production increased by 2 percent. “Though solid minerals grew significantly, a drastic reduction of investment in the development of oil wells in 2012, compared to 2011, contributed to the low growth of the Mining and Quarrying sub-sector,” said Dr. Philomena Nyarko, Government Statistician.

Last year operators of the Jubilee oil field reported problems with some production wells which caused output to fall drastically in the second quarter, before recovering in the last three months of the year. Output in 2012 was 71,998 barrels per day, Government’s 2013 budget said -- still an increase, of 8.9 percent, from 2011.

This year Government has projected average daily production of 83,341 barrels, an estimate seen to be conservative as the Jubilee partners have said output is now near its peak of 120,000 barrels per day.

In the services sector, information/communication output soared by 23.4 percent and financial intermediation grew by 23 percent, making the two sub-sectors the biggest contributors to growth. Output by hotels and restaurants improved by 13 percent, the GSS said. Government has projected growth to be 8 percent in 2013, despite plans to cut the budget deficit to 9 percent of GDP from 12.1 percent in 2012.

Meanwhile, annual consumer inflation shot up to 10.4 percent in March from 10 percent in February after both food and non-food price inflation gained in the month. The rate is the highest since May 2010, and reflects the impact of sharp increases in transport prices after petroleum subsidies were withdrawn in February. Food inflation rose to an eight-month high of 5.5 percent, while the non-food rate climbed to 13.2 percent.

The Bank of Ghana kept its policy lending rate at 15 percent in February, saying it was waiting to assess the effect on consumer inflation of an expected revision in the consumer price index basket and base period.

It warned that the excessive deficit in 2012 -- which was nearly twice the 6.7 percent of GDP target, demanded Government to chart a path of fiscal consolidation in 2013 that must include measures to control public-sector wage pressures, energy subsidies, and fiscal arrears.