Ghana: Growth slows to one-year low in Q2
The economy expanded 5.7% year-on-year in the second quarter, down from the previous quarter’s 6.7% increase, according to a preliminary estimate released by Ghana’s Statistical Institute. The print undershot market analysts’ expectations and marked the slowest expansion in a year. Similarly, in quarter-on-quarter seasonally-adjusted terms, growth moderated from 1.6% to 1.4%.
The second quarter’s deceleration was nearly broad-based. Notably, the industrial sector expanded at the slowest pace in three years (Q2: +6.1% year-on-year; Q1: +8.4% yoy) on a contraction in the construction sub-sector, amid lacking infrastructure spending by the government, and a fall in both water and electricity supply. In addition, growth in the mining and quarrying sub-sector, which includes oil, fell markedly from a quarter prior.
In addition, activity in the service sector expanded by 6.5% in the second quarter, down from the first quarter’s 7.2% outturn, amid a contraction in the public administration sub-sector. On a brighter note, activity in the information and communication sub-sector, as well as in real estate, soared from the previous quarter.
In contrast, the agricultural sector expanded by 3.1% in Q2, up from the previous quarter’s 2.2% increase, thanks to upbeat crop output. That said, activity in the forestry and fishing sub-sectors contracted at a sharper pace than in Q1.
Looking ahead, the economy is projected to maintain a solid pace of expansion this year, underpinned by blazing domestic demand. Momentum should ease somewhat next year, however, as a volatile international backdrop weighs on investment as well as on export performance. Fiscal slippage ahead of next year’s general election poses a key downside risk to the outlook.