Ghana: Economy shoots out of the blocks in Q1
June 28, 2017
According to a provisional estimate from the Ghana Statistical Service, the economy picked up considerable speed in the first quarter of the year and seems to have recovered from the marked slowdown observed in the middle of 2016 as a result of shutdowns at oil and gas fields and low commodity prices. GDP growth came in at 6.6% year-on-year in Q1, up from 4.1% yoy in Q4 and marking the strongest quarterly figure in over two years.
Q1’s notable uptick was broad-based, with industry leading the way (Q1: +11.5% yoy; Q4: 3.0% yoy) thanks to a stellar performance from the mining and quarrying sub-sector, likely due in part to notably higher prices for oil, one of the country’s key commodity exports. Growth in the service sector dropped off somewhat (Q1: +3.7% yoy; Q4: +6.3% yoy), due largely to declines in the hotels and restaurants and public administration sub-sectors. Firms in the hotels and restaurants sub-sector are being held back by a high tax burden, mounting utility costs and burdensome regulations, while the government’s fiscal consolidation efforts are likely partly behind the contraction in the public administration sub-sector. Agriculture expanded at a solid rate, aided by a booming fishing sector (Q1: +7.6% yoy; Q4: +1.9% yoy).
Looking ahead, growth should remain elevated as further oil production comes on stream, oil prices rise somewhat and the service sector continues to perform strongly. In addition, the implementation of measures announced in the 2017 budget should help tame the cavernous budget deficit and put the public finances on a more sustainable footing, leading to a more certain business environment and encouraging investment.
Author: Oliver Reynolds, Economist