First quarter GDP advances by 4.1%

The Ghana Statistical Service (GSS) has released the provisional real GDP figures for the first quarter of 2015, which show the country’s economic pace of expansion advanced by 4.1 % compared with a revised figure of -3.8 percent during the same period last year.

 

The data by the GSS revealed that the provisional real GDP estimate including oil for the first quarter of 2015 was GH₵27,512.8million, while the revised estimate for quarter-four of 2014 recorded GH₵29,223.7million.

The current GDP estimate excluding oil for first quarter of 2015 is GH₵25,634.8million and the revised value for quarter-four of 2014 is GH₵27,345.7million. In constant terms, the first-quarter 2015 GDP is estimated at GH₵7,673.3million while for fourth-quarter 2014 the estimate was GH₵9,185.4million.

The quarter-on-quarter basis GDP growth rate recorded for the first quarter of 2015 stood at 0.9%, while the revised figure recorded for the fourth quarter of 2014 was 1.2%.

The figures released by the GSS show the agriculture sector recorded the highest growth rate of 7.4 percent year-on-year while the services sector registered 4.7 percent, with data usage for cell phones growing at 4.7 percent.

 The Information & Communication sub-sector recorded the highest year-on-year quarterly GDP growth rate of 41.3%, while the Hotels and Restaurants sub-sector recorded the lowest growth rate of -8.0%. 

The industry sector contracted by 0.9 percent: “Most industries have put in place measures this time around to ease impacts of the power crisis facing the country,” Government Statistician Dr. Philomena Nyarko told a media conference in Accra -- saying that the impact of blackouts on the economy was more severe in 2014 than this year.

“I think the energy crisis was more pronounced last year; we are now seeing increase in public administration, livestock, and communication,” Dr. Nyarko said.

Meanwhile, some analysts have argued that 2015 will witness a difficult year as the government, which has projected a GDP growth of 3.9 percent, is implementing austere policies aimed at tackling the country’s wide budget deficit of 9.8 percent, while the World Bank has forecast a more optimistic GDP growth of 4.5 percent for the country this year.

The energy supply deficit, which has resulted a load-management of power, also appears far from over in spite of the start of gas production to feed 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 also affect the budget programme.

John Kwakye, an economist with the Institute of Economic Affairs, has forecast that the country's debt-to-GDP ratio will peak at 72 percent this year due to an International Monetary Fund (IMF) bailout -- but will decline to 58 percent in 2019 before tapering-off within two decades.

“For purposes of comparison -- under the current Ghana-IMF programme, the debt-to-GDP ratio is forecast to peak at 72% in 2015.” 

However, Kwakye expressed confidence that the ratio could fall to 58 percent by 2019 and further to 39 percent by 2034, based on what he described as “progressive fiscal consolidation and continued decline in the fiscal deficit".

To tackle the structural imbalances -- mounting public sector debt, stubborn inflation, dipping local currency, and rising, inflation -- government recently announced a fiscal stabilisation strategy and reached an agreement with the IMF about a new programme.

If realised, the IMF extended facility should support  fiscal adjustment for the 2015 to 2017 period.

Weak fiscal management has worked to undermine Ghana's economic progress, Kwakye said, by “exacerbating macroeconomic instability, creating a looming debt-crisis, and crowding out the private sector.

“Adopting a fiscal policy rule embedded in legislation will help to entrench the much-needed fiscal discipline in Ghana,” Kwakye stated.