The economy is set to grow at half the pace of 2011 after a sharp slowdown in the second quarter cut this year’s GDP growth forecast from 9.4% to 7.1%.

The coming onstream of oil production drove GDP growth to 14.4% last year, but a slowdown had been expected in 2012 -- though not below 8%, according to the government and most analysts.

The Ghana Statistical Service (GSS) said on Wednesday it expects agriculture, industry, and services to grow by 2.6%, 7% and 8.8% respectively. That will take nominal GDP to GH?71.8billion (US$37.8billion), it said.

The GSS also said second-quarter GDP growth was 2.5% year-on-year, down considerably from the revised 15.7% in the first quarter and contributing to the lower full-year projection. The agricultural sector contracted in the second quarter by 0.1%, according to the data, while industry and services increased.

Acting head of the GSS, Philomena Nyarko, said a fall in oil production in the second quarter had a dampening effect on growth.

For the entire year, oil output is expected to shrink by 5% in real terms, together with forestry and logging activities, which are forecast to decline by 18%.

Analysts, including Dr. Joe Abbey of the Centre for Policy Analysis (CEPA), had expected growth to be above 8% despite signs that oil production from the Jubilee Field was not going to be at levels previously anticipated.

“We’re not on the same page with them on oil. We expected the contribution of oil to be lower, but we did not see it descending so sharply,” said Dr. Abbey.

Oil output in the second quarter fell by some 600,000 barrels from the previous three months, due to a temporary shutdown of some wells for acid stimulation activity, the Bank of Ghana said in its semi-annual report on the sector.

It said Jubilee Field production averaged 63,000 barrels per day in the first half, and will ramp up to between 70,000 and 80,000 barrels after the successful acidisation programme. Growth above 8% still likely

The 7.1% projection appears too pessimistic and will possibly be adjusted to a higher level in the subsequent revision, said Joe Abbey.

“From the data on the first and second quarters, and looking at our own established patterns for quarterly growth, we think growth could be as high as 8.7%, which is higher than the 8.5% that CEPA has been using in its work.”

He said a repeat of the spending binge embarked on by the government in 2008 could push growth above 9%, but warned that would come at the cost of macroeconomic stability and plunge the economy into another era of stabilisation in 2013.

Producer inflation drops

As growth slowed, producer-price inflation eased to 16.6% in August from a revised July rate of 19%, the GSS said. The drop was due to falling rates in the manufacturing and mining sectors.

Utilities price-inflation stabilised in the month, while manufacturing inflation decreased from 20.3% to 18.6% and mining & quarrying went down from 20.3% to 16.9%. On a month-on-month basis, producer prices rose by 0.3% overall in August.