ISSER launches state of Ghanaian economy report

The Institute of Statistical, Social and Economic Research (ISSER) of the University of Ghana (UG), Legon on Tuesday, launched the “State of the Ghanaian Economy Report (SGER), 2012.”

The 214-page report, which was compiled by a team of researchers from ISSER, was launched by Professor Ernest Aryeetey, Vice Chancellor of the UG.

Prof Aryeetey said he was hopeful that the report would provide a platform for meaningful analysis, generate widespread debate on the economy and encourage policy makers to consider the evolving prospects and the challenges confronting the economy.

The SGER, which is the 22nd edition in the series of publications since 1991, provides a detailed assessment of how the various sectors of the economy notably agriculture, industry and services fared in the past year.

Professor Felix Asante, Director of ISSER, who presented an overview of the report, said although Ghana made phenomenal strides in economic growth, with a record high Gross Domestic Product (GDP) growth of 14.4 per cent in 2011, it failed to sustain the momentum, thus falling to a lower growth rate than was targeted for 2012.

He said the report indicates that economic growth in 2012 was 7.2 per cent and this translates into a real GDP of GH¢ 30.1 billion and a nominal GDP of GH¢ 73.1 billion. Prof Asante explained that the fast growth which was recorded in 2011 resulted from the injection of oil revenue.

He pointed out that in order to transform the economy, government must deal with the issue of productivity, law enforcement and promotion of science and technology.

He indicated that considering the challenges and setbacks of the last three years, the next development strategy for Ghana from 2014 should focus on policies of inclusive growth with the aim of ensuring sustainable economic growth and social cohesion.

Prof Asante said the report recommended that Government should pursue an employment-centred economic growth strategy that would ensure that employment is expanded along with production.

The measure should take into consideration issues of productivity and ensure that the benefits of growth are widely shared through better job opportunities and enhanced incomes, especially for the growing unemployed youth.

The report also suggested that sustainable exploitation of Ghana’s natural resource endowments in agriculture, minerals, oil and gas, should be supported by strategic investment in human capital, infrastructure, science, technology and innovation.

Prof Asante said government must also ensure rapid infrastructural and human development, as well as the application of science, technology and innovation to enhance the creation of employment and income earning opportunities for rapid and sustained poverty reduction.

He said contrary to what pertained in 2011 during which economic performance was strongly driven by industrial growth in the oil, construction and mining sub-sector, the strongest performance came from the service sector, which served as the engine of growth in 2012, while the agricultural sector continue to perform poorly, a trend which had been observed since 2006.

Prof Asante explained that the overall growth of the agricultural sector was 1.3 per cent in 2012 compared to 0.8 per cent in 2011, but well below the growth of 5.3 per cent in 2010 and this was also below the target growth rate of 4.8 per cent envisaged for the year.

According to him during the year under review, the monetary policy achieved an end-of-year inflation of 8.6 per cent, compared to the target rate of 9.0 per cent set at the beginning of the year. He said the poor performance was due to the decline in cocoa, forestry and the logging sub-sectors.

On inflation, he said although the disinflationary process was on course, its sustenance would require prudent management of expenditure which rose from GH¢ 9,229 million in 2011 to GH¢18, 512 million in 2012, representing an increase of 100.6 per cent, or else the single digit inflation target would be missed.

He also pointed out that even though government’s fiscal revenue and grants had improved considerably for the first half year, the expenditure rate for the overall balance had worsened actual targets with the private sector absolving the bulk of the credit balance within the economy.

Prof Asante attributed the downward trend of inflation to prudent monetary gains and limitation to debt financing and cautioned that growing of the debt stock would increase inflationary rates.

He argued that government’s effort to increase the tax base and mobilise more revenue to offset the huge wage bill as a result of the implementation of the Single Spine Pay Policy in 2012, must not necessarily burden existing tax payers, but bring on board all eligible tax payers to increase revenue.

Prof Asante said the report indicates that despite the discovery of oil, the composition of Ghana’s trade continues to be dominated by the export of primary commodities such as gold and cocoa, which accounted for 62 per cent of export receipts in 2012.

Last year recorded a relatively higher balance of trade deficit of 4,221.4 million dollars against the trade deficit of 3,052.3 million dollars netted in 2011. There was a slight deterioration in the accumulation of Gross International Reserves from 5,400 million dollars in 2011 to 5, 48.9 million dollars in 2012.

There was therefore the need to take a closer look at the computation of the country’s inflationary rates so as to better gauge the rate at which prices increase. He also stressed the need to keep an eye on the growing public debt in order not to derail the economic gains so far made.

He argued that unless more aggressive efforts are made to reduce the cost of servicing loans, the private sector would not be able to take advantage of low inflation and other policies aimed at creating a vibrant private sector that would create jobs and promote economic growth.