Showing posts with label Ghana Statistical Service. Show all posts

Sunday, 20 September 2020

COVID-19 exposes fragility of Ghana's economy





Adnan Adams Mohammed


Ghana’s economy contracted for the first time in almost four decades in the second quarter, by an annual 3.2%, as coronavirus restrictions stalled economic and social activities in the part of the year.


 The country during the early stage of the spread of COVID-19 imposed a three-week lockdown in March to halt the spread of the pandemic, forcing many businesses to close, government statistician Samuel Kobina Annim told a news conference.


 An economist has said Ghana’s economy would have sunk deeper into recession but for the financial sector reforms implemented by the central bank as well as the fiscal stimulus package announced by government


 “The various reforms strengthened the economy to withstand the shock presented by the pandemic”, Courage Martey, an economist with the Databank Group, commenting on the Ghana Statistical Service’s (GSS) latest data


“Even after the restrictions have been lifted, many businesses across sectors have continued to close down,” Prof Samuel Kobina Annim, Government Statistician said.



“For the first time in 37 years, Ghana’s economy has seen a contraction of 3.2%, compared with a growth rate of 5.7% in the same quarter in 2019.”



The fall in output was mostly felt in manufacturing and in the services sector, where hotels and restaurants were shuttered to stop the virus spreading.



Ghana’s finance minister has said in July that the economy was expected to grow at its slowest rate in 40 years, at around 0.9% this year compared with a previous forecast of 6.8%.



The financial services sector, according to the statistical service, grew at 3.9 percent in the second quarter of this year, among a number of sectors that escaped the contraction caused by the coronavirus.



“Ghana had just emerged from fiscal and financial sector reforms, with the growth momentum already strong around its potential levels. Consequently, while the contraction was expected, the fiscal and financial sector reforms had already strenghtened Ghana’s capacity to withstand shocks,” Mr. Martey noted.



“Also, the swift decision by the Bank of Ghana to provide strong liquidity support to the financial system to mitigate a total collapse in private sector demand may have played a part. And since private sector demand would take time to recover, the government’s fiscal stimulus, as the bigger spender in the economy, was crucial to provide a backstop for aggregate demand.”


Other factors


The biggest slump in the second quarter GDP data occurred in the hospitality sub-sector, which fell by more than 79 percent year-on-year. This was followed by the trade, repair of vehicles, and household goods sub-sector, which saw a 20.2 percent contraction.


Despite the overall contraction in GDP growth, Mr. Martey explained that government’s decision to ease restrictions earlier, compared to most African countries, may have prevented further damage.


“This enabled a quicker restart of the economy and partly explains Ghana’s relatively modest contraction, compared to its peers. This also set up the economy to avoid a recession when the third-quarter numbers are published, because we expect a marginally positive growth rate for the third quarter of 2020,” he added.


Mr. Martey said government’s projection of achieving 0.9 percent GDP growth in 2020 appears more feasible now considering that the economy showed signs of a rebound in the latter part of the second quarter.


“If we consider the GSS data that proved that the economy had started showing signs of restarting from late Q2-2020, then there’s a reason to be hopeful for the 2H-2020.


For growth to fall short of the 0.9 percent projection for end-2020, we would have to grow by less than 1 percent on average in the second half of 2020.


“But I feel strongly that we have the potential to recover growth to 1 percent or more. Public expenditure in the lead up to the December 2020 elections should also provide another extraordinary lift to aggregate demand.”

Monday, 21 October 2019

BoG to review inflation target framework

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By Elorm Desewu

The Bank of Ghana, (BoG), is considering reviewing its inflation target band of 8±2 percent towards a rate which is more appropriate for the country.

The Ghana Statistical Service, announced 7.8 percent year on year inflation for August 2019 which came about because of the rebasing and the new Ghana Living Standards survey.

“I have said this before that when your trading partners’ inflation is below 5% and you have 8% inflation, you are not competitive. So, we must aim to drive inflation closer to the inflation rates of our trading partners. If you agree with this argument, then we should be looking at setting a lower medium-term target for inflation.

Whether it should be 5% or 6% is where the debate will be, but I expect that by the end of this medium-term period, we would probably have to reset the target for inflation lower”,  said the governor of BoG, Dr Ernest Addison.

The new inflation number of 7.8% means the country’s inflation rate is slightly below the medium-term target of 8±2 percent set by the BoG.

Following the revision of the Consumer Price Index by the Ghana Statistical Service to reflect weights from the Ghana Living Standards Survey of 2017 and a revised base year of 2018, a new measure of headline inflation was estimated at 7.8 percent for August 2019, moving it below the central path of the Bank of Ghana’s medium-term inflation target of 8±2 percent.

Food inflation was reported at 8.2 percent and non-food inflation was at 7.4 percent. However, underlying inflation, measured by core inflation (CPI excluding utility and energy) inched up slightly, alongside some moderate pick-up in inflation expectations from businesses, consumers, and from the financial sector. 

Saturday, 27 April 2019

2018 growth slowed almost 2% affected by oil and financial sectors

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Adnan Adams Mohammed

The country recorded almost 2 percentage point decline in the annual economic growth rate for 2018 as measured by Gross Domestic Product (GDP), after an impressive growth recorded the previous year.

The Ghana Statistical Service (GSS) released data, last week, showed that, the nominal GDP growth rate for 2018 dipped to 6.3 percent compared to 8.1 percent recorded in 2017, representing a 1.8 percentage points decline. However, in monetary terms, the economy is worth some GH¢300.5billion (using 2013 as the base year).

An analysis of the figures indicate that, the financial and insurance sector is partly responsible for the decline in 2018 growth, as the sector contracted by 8.2 percent – making it the worst-performing among all sectors of the economy.

The oil and gas sector, on the other hand, was the sector that experienced a tremendous decline in growth as it saw a terrific tumble to 3.6 percent from the 80.3 percent recorded in 2017, which is almost 76.7 percentage points decline.

Head of Department of Finance at the University of Cape Coast, Prof. John Gatsi has said, happenings in the oil and gas sector are normal and expected; but challenges in the financial sector need to be fixed immediately to restore accelerated growth.

“Normally, when new significant oil discoveries come on the production scene, they have some immediate significant positive impact before some normality takes place.

“So, the huge performance of 2017 was the result of both resolving the energy sector crisis and investment in the oil and gas sector that brought on-stream the ENI production and other fields. So it was expected that the growth rate for 2018 should be normalised,” he said in media interviews after the release of the data by the GSS.

“But beyond that, we also realise that there was a significant negative influence by the banking and insurance sector on economic activities; because, to a large extent, credit to the private sector was very limited and people were not getting access to funds to undertake the real sector economic activities. So, that is why the reduction in the banking and insurance sectors’ contribution to GDP was very significant, and this needs to be restored quickly.

“As we speak, it is not restored. We see a lot of asset management companies going through turmoil right now as a result of the pass-through effect of the policy reforms in the banking sector.

“There are many asset management companies which are challenged in terms of liquidity because their funds are locked up in the banks which were consolidated… We need to work assiduously to restore that, to allow the banking and financial services sector to actively play its significant role in financing activities that will contribute to the country’s GDP,” he said.

In sectoral terms, the industrial sector outpaced the other two sectors—agriculture and services—in growth. Industry grew by 10.6 percent, a 5.1 percentage drop from 2017; services also saw a drop of 0.6 percentage points to record 2.7 percent; and agriculture declined by 1.3 percentage points to record a growth of 4.8 percent.

However, the services sector maintained its position as the largest contributor to the economy with 46.3 percent; followed by industry with 34 percent; and agriculture sector 19.7 percent.

Friday, 19 April 2019

Inflation rises to 9.3% in March

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Adnan Adams Mohammed
Year-on-year Inflation for the month of March inched up slightly to 9.3 per cent from the 9.2 percent recorded in February.

The March 2019 figure is 0.1 percentage points higher than the 9.2 per cent recorded in February this year, the Ghana Statistical Service (GSS) has said.

This is, however, 1.1 percentage point lower than inflation recorded for same period last year. In March 2018, inflation was 10.4 per cent.

Some analyst have attributed the depreciation cedi during the first quarter of the year, ending in March to what drove up the inflation for the period, for the second consecutive period this year.

“The increase in the inflation for the month was partly due to the increase in the inflation for the food sub-group.” Deputy Government Statistician, David Kombat noted during the press briefing last week. The Food sub group is made up of mostly imported goods.

The food inflation basket recorded a rate of 8.4 per cent, compared to 8.1 per cent recorded in February 2019. While, the non-food basket inflation rate of 9.7 per cent in February 2019 remained unchanged in March 2019.

The main drivers of non-food inflation were recreation and culture (14.1 per cent), transport (13.7 per cent), clothing and footwear (13.3 per cent) and furnishing, household equipment and routine maintenance (12.2 per cent).

The price drivers for the food inflation rate included coffee, tea and cocoa (13 per cent), mineral water, soft drinks, fruit and vegetable juices (11.1 per cent) fruits (10.2 per cent) and meat and meat products (9.1 per cent).

At the regional level, Deputy Government Statistician, David Kombat said four regions — Upper West, Brong Ahafo, Western and Ashanti — recorded inflation rates higher than the national average of 9.3 per cent.

The Volta Region recorded the same inflation as the national average, he said.

“The Upper West Region recorded the highest year-on-year inflation rate of 11.4 per cent, followed by Brong Ahafo with 10.2 per cent, while the Upper East Region recorded the lowest year-on-year inflation of 7.9 per cent in March 2019,” he said.

“We’ve seen an increase in inflation rate and it could be partly attributed to the exchange rate we’ve seen in recent weeks,” Mr Kombat said.

IMF projects higher inflation rate for Ghana

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By Elorm Desewu

The International Monetary Fund, (IMF) has projected an end year inflation of 8.7 percent for the country, which is slightly higher than the 8 percent target by the government.

However, the IMF projection of 8.7 percent end year was within the Central bank’s target band of 8±2 percent.

Figures from the Ghana Statistical Service indicates that year on year inflation measured by the Consumer Price Index, (CPI), has inched up marginally to 9.3 percent for the period ended March 2019 from 9.2 percent recorded in February this year.
This means that prices for goods and services has gone up by 0.1 percent for the month of March 2019.

Two inflation readings released by the Ghana Statistical Service since the January showed inflation still within the medium term target band.

Inflation decelerated in January to 9.0 percent, from 9.4 percent in December 2018, but inched up to 9.2 percent in February 2019 driven by increases in non-food inflation.  Since the last quarter of 2018, inflation has oscillated within a band of 9.0 - 9.5 percent, underpinned by a relatively tight monetary policy stance.

Underlying inflationary pressures, as measured by the Central Bank’s core inflation have continued to ease and inflation expectations remain well-anchored.

Monday, 28 May 2018

Rising joblessness a decade after oil find funfair…. Where did we go wrong?

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Adnan Adams Mohammed

Eleven years after the oil and gas discovery funfair and excitement, ironically graduate and skilled labour unemployment rather appears to be worsening and becoming a national security concern.  The Ghana Labour Force Survey Report commissioned by the Ghana Statistical Service (GSS) estimated that, more than 1.2 million persons from 15 years and older are unemployed in Ghana, representing the total unemployment rate of 11.9%, as at 2015. Also, the National Service Secretariat has estimated that, only 10% of students who complete their national service get employed.

These are staggering figures which portray the high rate of jobless youth in the country. Governments over this past decade have been compelled to adopt what appears to be firefighting and short-term measures to deal with a challenge that require long term and sustainable solutions. Youth Employment Authority (YEA), Youth in Agricultural Programme (YAP), Youth Enterprise Support (YES) and the newest National Builders Corp (NABCo) are some of the short-term vehicles to deal with the rising youth unemployment. But couldn’t a more strategic policy direction in our oil and gas industry provide us with sustainable ways of addressing the unemployment challenge?

Ghana in 2010 begun commercial production of oil and gas from the Jubilee Oil Field, a record three years after discovery. According to energy and labour experts, the multi-billion petroleum sector holds a great key to solving the unemployment situation by providing very lucrative and a wide range of professional, skilled and unskilled jobs. As it is known, the petroleum sector value chain cut across all the sectors of the economy; agriculture (food services), transportation services, professional services (legal, insurance, accounting, management and engineering), hospitality services (accommodation), logistic supply and metal fabrication and welding services among others. These sectors if well developed can provide meaningful jobs for the teaming youth coming out of school each year.

The huge potential of the oil and gas industry is obviously not oblivious to the authorities and that might have informed the relatively quick passage of the Local Content and Participation Legislative Instrument. The clear aim is to promote the use of locally made goods and services and also define local content targets across 10 main upstream supply chain sectors within the oil and gas value-chain to create massive job opportunities for Ghanaians. Each year a conference on local content and participation is organised by the Petroleum Commission, ostensibly to deepen the participation of the Ghanaian. However, participation by local companies in these areas remain low.

An Ernst & Young (EY) Ghana market study to assess the viability of the upstream supply chain sectors in Ghana, to increase local content at the speed and level stipulated by the local content regulation (LI 2204), reveals that in spite of the vast opportunities available, local participation is very low due to high barriers of entry. Partner advisor for EY, Mr. Michael Sackey, explained that “there are more foreigners than local companies in the upstream sector for a number of reasons. One is capability; today, as we speak, we don’t have the capability and it also takes a long time to build the capability: up to ten years.” The other reason he cited is about capital requirement. “We just don’t have the financial muscle to get into that space. While you have the foreign companies, who have been doing this for years,”, he explained.

According to the survey report, activities such as well drilling services are in high demand and attract the highest capital expenditure across the upstream value-chain. However, existing capacity of local suppliers to service the sector is low due to high requirements in skills, capital, HSEQ and technology. This is the area which creates more employment and business opportunities. “Well drilling services will attract the biggest spend up to 2024 in the industry despite the fact that local capacity is quite low.” Meanwhile, local capacity exists in the transportation & supply, HSE and IT & communications areas, yet, these areas do not create many job opportunities. But even in these areas, we share the spoils with foreign interests.

The complaints about lack of capacity and inadequate capital by local companies and individuals have remain the same a decade after discovery of the resource. Much as one concedes that these are real challenges, for these complaints to remain with us even after a decade suggest some lack of seriousness to address them. Considering how worried we seem to be about the worsening unemployment situation and the employment potential of the oil and gas industry, one would have expected a strong effort to address the challenges in order to enable more local content and participation, which will give us the jobs we so badly need.

The other leg of the challenge is enforcement of the local content regulations particularly for Joint Venture (JV) companies. Players in the industry are all blaming the Petroleum Commission (PC) for failing to execute its mandate appropriately. Interacting with some local companies, a major issue that kept coming up was the sharing of the scope of work under contracts. In undertaking projects as subcontractors for the main Operators (International Oil Companies), it is a requirement to state the scope of work and how it is divided between the partners at the time of tender submission; it is also a requirement to ensure that this agreed scope of work is actually carried out by the JV; it is the responsibility of the Operator to see to it that these requirements are carried out as enshrined in the Petroleum Agreements ; lastly it is the role of GNPC as the business owner, and PC as regulator, to ensure that the Operators carry out their duties and that the sub-contractors of these operators follow the rules of engagement and the award conditions. Enforcement of these requires will certainly deepen local participation and create more job opportunities for citizens. But it appears the enforcement is lacking. In a shocking revelation, the former Boss of GNPC, Alexander Mould conceded that, “in practice many subcontractors under the watch of the Operators (International Oil Companies), the National Oil Company (GNPC), and Regulator (Petroleum Commission) flout this rule of engagement; the excuse is simple......‘because they can!’.”

It is obvious that there is the need for a strong will on the side of the government to have a clear policy towards using oil and gas as a major avenue for job and wealth creation and implement it effectively. Also, the regulator of the industry (Petroleum Commission) as a matter of urgency and importance should ensure that the regulations are enforced effectively and efficiently across board including the various JV arrangements. The Commission may also have to review aspects of the regulations to clear all ambiguities in the provisions of the law and also streamline the provisions a well as set realistic targets that reflect best practices in the industry in comparable countries. Only such deliberate and effective approach will bring us close to the excitement were expressed in June 2007, otherwise joblessness will remain a security threat even with all the natural endowments. There however are indications that the current management of the PC is desirous of deepening local content and participation but that must be quickly backed by real action, otherwise the value will remain the same and in the abundance of water, we will remain thirsty.

Saturday, 23 December 2017

Oil fuels 9.3% 3rd quarter economic growth - GSS

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Adnan Adams Mohammed

After some delay, the Ghana Statistical Service has released the third quarter Gross Domestic Product (GDP) figures.

For the third quarter this year, the economy grew by 9.3% according to provisional figures.

The figure represents a 0.3 percent increment from what was recorded in the previous quarter, and is 4.7 percent higher than the 4.6 percent recorded in the third quarter of last year.

However, the Statistical Service stated that the oil sector contributed largely to the growth of the economy in the quarter.

In sectoral terms, the industrial sector outperformed the two other sectors—agriculture and services – growing by 16.6 percent, whereas agriculture and services grew by 10 and 5.7 percent respectively.

However, the services sector maintained its position as largest contributor to the economy with 53.4 percent – followed by industry with 23.6 percent and 23 percent for the agriculture sector.

Commenting on what accounted for this quarter’s growth of 9.3 percent, Acting Government Statistician Baah Wadieh said: “This can be attributed mainly to the high growth rate recorded in the following sub-sectors: fishing grew by 57 percent during the quarter. Then we also have mining and quarrying, which grew by 40.8 percent, and out of this oil and gas grew by 72.2 percent. We also recorded substantial growth rates in the health and social works sector, of about 24 percent.

The growth of 72.2% in the oil sector was due to the fact that the country witnessed a fairly stable oil production from the oilfields.  Commercial production from the new TEN field  contributed massively to oil production as compared to same period last year.

According to the statistics, between July and September 2017, the value of all goods and services produced in the country, including oil; amounted to 56.1 billion. This is up from the 45.4 billion cedis recorded in the same period in 2016.

The value of all goods and services produced without oil amounted to GHC53.1 billion, also representing an upward growth compared to the GHC44.4 billion recorded in the same period in 2016.

From the figures it shows that Ghana’s economy continues to be led by the oil sector for the past years since commercial oil production started.

This is a development, some economists have warned could have dire implications for the country’s future if not checked.

Meanwhile, a further breakdown shows that industry comprising mining and quarrying, water and sewerage as well as manufacturing, grew highest between July and September this year.

The sector grew by 16.6 percent.

Even though the mining and quarrying subsector’s growth decreased to 40.8 percent, it still led industry’s growth.

The Acting Government Statistician, Mr. Baah Wadieh explained the role of oil in the growth.

“We had oil and gas growing by 72.2% and that was due mainly to the increase in production from the TEN and Sankofa oilfields and as a result, we recorded the high growth rate,” he said.

Already, institutions like the Africa Centre for Energy Policy (ACEP) have urged government to be tough in claiming its due from oil producers who flout the nation’s rules.

In ACEP’s view, the move should provide a fall back plan as the oil resources could get exhausted by the next eight years.

Again, the agricultural sector grew by 10 percent between July and August this year, up from the 3.4 percent growth recorded in the previous quarter spanning April to June.

This growth has largely been triggered by the significant growth in fishing subsector.

This comes despite concerns of a dwindling fish industry due to low fish catch,a situation the Fisheries and Aquaculture Minister, Elizabeth Afoley Quaye had equally lamented in an interview earlier this year.

But according to the Statistical Service, the country recorded a rather positive outlook between July and September this year.

“According to the figures that we received from the Ministry of Fisheries, there was expansion in the actual volume catch of fish during this year and this is seasonal when it is traced from the previous figures that they send us. It is observed that around the third quarter, there is increased catch,” the Acting Government Statistician, Baah Wadieh explained.

Interestingly, the services sector this time around recorded the least growth of 5.7%.

For instance, the finance and insurance subsector recorded a negative growth of 4.1 percent, compared to the 1.3 percent recorded in the same period last year.

It is unclear what led to this but some have attributed the development to the non-performing loans among commercial banks which continue to impact on their operations.

Tuesday, 19 December 2017

Hoarding third quarter GDP figures worrying - financial analyst

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Adnan Adams Mohammed

The Ghana Statistical Service (GSS) has for the first time delayed the release of the Gross Domestic Product (GDP) statistics for the third quarter.

The third quarter GDP figures is published together with the November inflation figures, normally on the second Wednesday in December, per the GSS timetable for release of relevant economic data.

However, it was strange to note that, at the release of the November inflation figures last week, the GSS failed to release the GDP figures as well as it is the norm.

Hon Isaac  Adongo, a financial analyst and member of parliament commenting on the situation described it as ‘very strange’, adding that, especially that the Finance Minister used mid-year performance of the economy in his budget presentation.

“One would have, therefore thought that the GSS would have, by now, released data on the economy to help businesses and analysts to make informed decisions and projections about the economy”, he said.

“However that is yet to happen,16 days into the end of the year. Although strange, it is now obvious that the Ghana Statistical Service is scheming to cook up growth numbers to justify the obvious unrealistic non-oil GDP projection of 4.8% used by the Finance Minister in the face of non-performance of revenue”, he retorted.

The renowned financial expert known for his toughness on the current administration on economic and financial related issues did not mice words in describing the situation.

Hon Adongo rrlated the Statistical Service's inability to release the growth figures to a form of conspiracy to help to justify the government’s plans on how the economy can generate GHC12.9 billion in revenue in the 4th quarter to fund the projected GHC16.7 billion expenditure in the last 3 months of the year to keep the deficit at the unrealistic 6.3%.

“Let me emphasis that this is part of a grand scheme with the Bank Of Ghana (BoG) to suppress Ghana's true deficit, public debt and debt to GDP ratio.
However, let me remind the government that cooking data to tell a story about the economy is not sustainable.”

He therefore called on the governmaental agenacies to be professional im their mandate to the citizens and the international world. “I therefore call on the GSS and the BoG to remain professional in the discharge of their duties to help give Ghana's international partners, especially the International Monetary Fund (IMF), which has a fiscal sustainability programme with the government, the true picture about the economy and its state of affairs. This way, the GSS and BoG will continue to maintain their integrity as the best source of truthful information on the economy.”