Ghana: Economic growth slows to near four-year low in Q1
The economy lost traction in the first quarter of this year on the back of the fallout from Covid-19, with GDP growth slowing from 7.9% year-on-year in Q4 2019 to a near four-year low of 4.9%. Meanwhile, the economy grew 1.2% over the prior quarter on a seasonally-adjusted basis, down from the over two-year high of 1.9% in the prior quarter.
The slowdown in annual growth was primarily driven by markedly softer expansions in the agricultural and industrial sectors, with growth easing to 2.8% yoy (Q4: +6.8% yoy) and 1.5% yoy (Q4: +5.4% yoy) respectively. The agricultural sector was weighed on by contracting activity in the forestry and logging subsector, while the locust plague likely harmed the production of food—a key export product. Activity in the industrial sector was dragged on by weaker construction, while manufacturing and mining and quarrying output growth eased amid government-imposed restrictive measures since mid-March to contain the spread of Covid-19, and soft global demand for oil. Activity eased less sharply in the services sector, which remained the main growth engine in Q1, with growth dipping from 11.0% in Q4 to 9.5% in Q1.
Looking ahead, the economy is expected to decelerate notably this year on the back of weak foreign demand for oil and low oil prices, as well as moderating domestic demand due to local containment measures and job losses. The vulnerability of the external sector and government finances on volatile commodity prices, and a possible prolonged viral outbreak cloud the outlook further.