Ghana’s economy possibly becoming oil-dependent – Prof Asante

Nana Osei Bonsu,(middle) launching the report. Those with him are Prof. Felix Ankomah Asante,(left) and Dr Simon Bawakyillenuo,(right).

Nana Osei Bonsu,(middle) launching the report. Those with him are Prof. Felix Ankomah Asante,(left) and Dr Simon Bawakyillenuo,(right).

Signals that Ghana’s economy was possibly becoming oil-dependent was manifested in 2017 with oil being by far the main contributor to the faster growth that year, Professor Felix Ankomah Asante, Director of Institute of Statistical, Social and Economic Research (ISSER), has said.

He said the issue was worthy of future investigation, especially given the potential that Ghana could become victim of the ‘‘oil curse’’, a phenomenon of over indulgence of oil revenue against other traditional exports.

Prof. Asante said these in Accra on Tuesday at the launch of the 2017 State of the Ghanaian Economy report, a research report by ISSER with focus on important segments of the economy to determine its growth or otherwise

He said Ghana’s Gross Domestic Product (GDP) grew by 8.5 per cent in 2017, an increase from the 3.7 per cent rate in 2016, representing a substantial recovery from the downward trend beginning in 2012.

He said the economic growth, which impacted on countries in sub-Saharan Africa, from which Ghana also benefitted was attributed largely to the apparent resurgence of commodity prices, especially in petroleum prices adding that, not only did Ghana benefit from the positive price effect, but also enjoyed higher volumes of petroleum exports.

He, however, indicated that Ghana’s growth rate was projected to decrease to 6.3 per cent in 2018 by 2.2 percentage compared to the 2017 growth rate.’.

Prof. Asante said the projection for 2018 also critically assumed that electricity power outages,  which improved significantly in 2017, would have  been addressed, adding that there was the need to also ensure that the country’s infrastructural problems would receive maximum attention in order to sustain growth.

Touching on other sectors which led to the growth in 2017, Prof. Asante said Ghana’s fiscal situation improved considerably in the year under review due to both high revenues and lower expenditures as a proportion of GDP, leading to a smaller fiscal deficit.

He said Ghana’s external balance also improved due to both an expansion in exports and a contraction in imports, both nominally and as a proportion to GDP adding that the trade balance even enjoyed a surplus, for the first time in recent history.

Prof.Asante said the external current account deficit improved by some two percentage points in 2017 but was projected to fall to four per cent by 2019 adding that the International reserve holdings which were higher in 2017 than in 2016 were not forecast to change much in 2019.

He said Ghana’s inflation rate which has been historically high in the sub-region has been closing with the country’s average rate decreasing from 17.5 per cent in 2016 to 12.4 per cent in 2017 adding that interest rates also remained very high in the country, especially compared with low rates globally.

‘‘Such levels are likely to discourage borrowing and investment, thus, the decline in real long-term rates in Ghana during 2017 is a welcome development, ‘he said.

Prof. Asante said although total government debt has decreased from 73.4 per cent of GDP in 2016 to71.8 per cent in 2017, it remained far above the debt-to-GDP ratio, with infrastructural challenges remaining daunting saying ‘‘This infrastructural challenge calls for a serious prioritiSation of Ghana’s public finances which require considerable political discipline’’.

By Lawrence Markwei and Abeduwaa Lucy Appiah

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