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Business News of Monday, 28 June 2021

Source: thebftonline.com

Extractive, hospitality sectors still in economic quagmire

The mining and quarrying sector contracted by 11.2 percent The mining and quarrying sector contracted by 11.2 percent

Even as the country strives to recover from the ravages of the pandemic, the two hardest-hit sectors – extractives and hospitality – continue finding it difficult to come out of the economic quagmire, as both saw their largest contraction in the first quarter of the year.

Data published by the Ghana Statistical Service (GSS) show that despite the pandemic-hit economy growing by 3.1 per cent in the first quarter, the mining and quarrying sector rather contracted by 11.2 per cent – while the hotels and restaurants (hospitality) sector contracted by 10.7 per cent within the period. The two sectors have never seen growth since the pandemic hit the country.

Compared to the pre-pandemic period, the extractive sector grew by 1.4 per cent in the first quarter of 2019 while the hospitality sector grew by 6.4 per cent within the period. On an annual basis, the two sectors grew by 14.9 per cent and 3.7 per cent respectively in 2019.

The hospitality sector, for example, has been on the receiving end of restrictions imposed by the government to contain the spread of the virus. The industry continues to suffer because most countries have still not lifted restrictions they imposed on travel and gatherings – two activities that are the bedrock on which hotels and restaurants stand.

Anecdotal evidence from observations at the big hotels and restaurants across the capital shows signs of reduced activity. Hotels, which were once upon a time inundated with requests to host events, are now struggling – with some going a whole week without a single event.

What has worsened the industry’s plight, even more, is the emergence of digital platforms that are able to host webinars and other conferences. Event organisers are cutting costs by either resorting to virtual conferences or combining the use of these platforms and in-person gatherings when hosting events at hotels. This, therefore, reduces the revenue of hotels, as organisers will only use small conference rooms for their events.

Guest check-ins are also on a decline, as restrictions on travel have negatively impacted the business of hotels – especially when the country no longer requires mandatory hotel quarantines for travellers.

Despite the two sectors contracting, the information and communication sector regained its position from the real estate sector as the driver of the economy with 22.1 per cent growth, followed by the latter with 10.6 per cent growth.

The agriculture sector continued to save the country’s blushes, as it once again toppled the industry and services sectors by recording 4.3 per cent growth. Industry and services on the other hand grew by 1.3 per cent and 4 per cent respectively – meaning the economy is not back to its pre-pandemic status, as the services sector has, for more than a decade, led the growth of the economy and become the main dominant force.

That notwithstanding, the services sector is still the largest contributor to the country’s GDP with 53 per cent followed by industry with 25 per cent, and agriculture contributed 22 per cent. In terms of value, the GDP (Including Oil & Gas) estimate at constant 2013 prices for the first quarter of 2021 was GH¢45.3billion compared to GH¢43.9billion in the same period of 2020.