Ghana: Economy contracts at steep pace in Q2 amid Covid-19 fallout
September 16, 2020
The economy contracted for the first time in four years in Q2 as the Covid-19 pandemic and associated containment measures dealt a heavy blow to domestic and foreign activity. In the second quarter, the economy contracted 3.2% year-on-year (Q1: +4.9% yoy) and shrank 0.8% in seasonally-adjusted quarter-on-quarter terms (Q1: +1.2% qoq).
The annual downturn came on the back of falling output in the industrial and services sectors, with activity decreasing by 5.7% and 2.6%, respectively (Q1: +1.5% yoy and +9.5% yoy, respectively). Industrial output was particularly restrained by nosediving manufacturing and a steep decline in mining and quarrying. The services sector suffered from domestic and foreign travel restrictions, with the hotels and restaurants subsector taking a particular hit. More positively, the agricultural sector expanded 2.5% compared to a year ago.
Looking ahead, economic growth is expected to slump markedly this year due to the fallout from the pandemic. However, the economy should bounce back next year as domestic and foreign demand gradually recover, although this will also be partly due to a supportive base effect. Volatile commodity prices, deteriorating government finances and a potential resurgence of Covid-19 next year cloud the outlook.
Author: Jan Lammersen, Economist