The 26th edition of the State of the Ghanaian Economy Report was, yesterday, launched in Accra.


The Report, which assesses the challenges and progress made in the economy, last year, indicates that Ghana’s Gross Domestic Product (GDP) grew by 3.7 per cent in 2016, a decline from 3.8 per cent in 2015 which continued the downward trend since 2011.


The Report reveals that Realized growth rate was below the revised target of 4.1 per cent and that since 2004, non-oil GDP growth has outpaced overall GDP growth, with the gap widening in 2016.


The Report notes that ranking of sectoral growth in 2016 is similar to that of 2015 and 2014, with services leading with 5.9 per cent, followed by agriculture with 3.6 per cent and industry with-1.2 per cent.


The Report also reveals that Real Per Capita GDP growth fell from 1.3 per cent in 2015 to 1.0 per cent in 2016.


Services, Industry & the Agricultural Sectors Of The Economy


According to the Report, the largest and the fastest-growing sector of the economy in 2016 was the Services sector which contributed about 57 per cent of GDP, with Information and Communication recording the highest growth rate of 21.7 per cent, even though the sector’s contribution to the Services sector GDP remains consistently low, accounting for 5.8 per cent in 2016.


On the Industrial sector, the Report indicates that although it recorded a weak performance in 2016, it remained the second largest economic sector, accounting for 24.3 per cent of GDP in 2016—with the construction sub-sector accounting for 43.2 per cent of the output of the industrial sector and 13.7 per cent of nominal GDP.


The Report attributes the weakness recorded in the Industrial sector to the disruption in oil production and the lower growth of the water and sewerage sub-sector.


The Report reveals that the Agricultural sector, which contributed 18.9 per cent to the national output, is, however, still in recovery from the low-growth rate recorded since 2011, expanding, however, by 3.6 per cent in 2016 after two successive years of deceleration.


According to the Report, a positive trend is observed for all the five subsectors, with the cocoa sub-sector recording the greatest recovery while the production of food crops is the single most important employer of the rural labour force in Ghana.


Fiscal Developments


On fiscal developments, the Report reveals that the economy suffered from an overall budget deficit (including divestiture receipts) of about GH¢15, 608 million, representing 9.3 per cent of GDP, up from 7.3 per cent of GDP in 2015.


The Report reveals that Government revenue as a percentage of GDP deceased by 2 percentage points, from 21.4 per cent in 2015 to 19.4 in 2016.


Tax revenue, the Report indicates, has seen a continuous increase over the past years, even though the tax revenue target of GH¢ 28,868 million was not achieved leaving a shortfall of 10.9 per cent in 2016.


The Report reveals that total government payments including outstanding obligations for 2016 amounted to GH¢51, 884 million and that as a share of GDP, total government payments in 2016 compared to the 2015 share of 29.4 per cent.


According to the Report, total interest payments—domestic and external debt amounted to GH¢10, 770 million, 2.7 per cent higher than budgeted.


The Report attributes the high domestic interest payment compared to external interest payment to increased domestic borrowing.


The Report puts the total capital expenditure in 2016 at GH¢7, 678.9million which is 20.1 per cent higher than the target of GH¢6, 393.0 million.


According to the Report, the higher overturn was driven partly by higher foreign-financed expenditure which was on account of higher project loan disbursements than anticipated.


Monetary Policy & Financial Developments


On Monetary Policy, the Report indicates that the tightened monetary policy stance of the Bank of Ghana failed to curb the growth in money supply as Broad Money Supply (M2+) increased from GH¢46.45 billion in 2015 to GH¢56.69 billion, representing a growth of 22.04 per cent in 2016.


The Report put increase in the increase Net Foreign assets at 34 per cent due to a huge increase in foreign holdings of Deposit Money Banks (DMBs).


The Report reveals that the Net domestic assets with the bank of Ghana rose by 28.51 in 2016 as compared to 7.11 per cent in 2015—an increase attributable to an increase in net claims on the government by some 47.22 per cent.


The year 2016, the Report says, saw the Central Bank maintaining the policy rate at 26 per cent while inflation fell from 17.2 per cent to 15.4 per cent by the end of 2016.


The Report indicates that interest rate on a 91-Day Treasury bills decreased to 22.87 per cent by September 2016 from 23 per cent by the end of the year 2015.


The Report finds that average lending rates rose from 28.20 per cent to 32.68 per cent by the end of the second quarter 2016 as non-performing loans reached 19.3 per cent by the end of May 2016.


External Sector Developments


The Report indicates that Ghana’s trade pattern in 2015 reflected some slight improvement over the previous years, with the balance of payments recording a surplus as a result of an improved current account balance, driven by the rise in gold, export receipts and a reduction in non-oil imports.


In 2016, the Report said, the balance of payments surplus was US $ 247 million, representing 0.6 per cent of GDP, from the 2015 deficit position of US$106 million.


The Report indicates that the export share (measured as exports/GDP) decreased by 2.4 per cent while the import share (measured as  imports/GDP) recorded a decline of 6.7 per cent.


Among the recommendations of the Report are massive investments in productive infrastructure and the prudent management of government resources.


The Report recommended significant transformation of the weak infrastructural systems, particularly in the energy and transportation sectors of the economy while effectively addressing the ineffective public administration structured.     


Prof. Felix Ankomah Asante, Director, Institute of Statistical, Social and Economic Research (ISSER), College of Humanities, University of Ghana, presented the Report which was launched by Dr. Anthony Yaw Baah, Secretary-General of the Trade Union Congress (TUC) of Ghana.


Dr. Baah underscored the importance of research in socio-economic growth and urged government to make adequate budgetary allocations, for such research projects.

“We expect a bigger budget for research. We should not rely on foreign aid for research,” he emphasized and a recommended that the country’s prisons be a subject of focus in the next edition of the State of the Economy Studies.


Source: ISD (G.D. Zaney)