Ghana's Economy Modestly Strong — BoG/IEA

The recent growth in Ghana's economy has been described by the Institute of Economic Affairs (IEA) and the Bank of Ghana (BoG) as “modestly strong.”

Coming in the wake of global financial difficulties, analysts believe the thumps-up from the two respected institutions is likely to send favourable signals to prospective investors and the business community.

In its 2007 economic review published in August this year, the IEA observed in its analysis that:

“Overall economic activity during the year 2007 was modestly strong in spite of the energy crisis which started at the end of August 2006 and ended at the end of September 2007. Despite the high world crude oil prices, the annual growth of the economy was 6.2 per cent just slightly below the target of 6.5 per cent.”

While the institute mentioned that the economy came under some stress in 2006 and 2007, including the shortfall in agriculture due to flood disasters and a slow down in  manufacturing, obviously owing to power shortages at home and crude oil price hikes internationally, the IEA nevertheless observes that:“The trend in some selected indicators of the real sector such as income and corporate tax receipts, number of job vacancies advertised and social security contributions confirm that the overall performance of the economy was modestly strong for much of the year (2007).”

This favourable view of Ghana's economic performance is shared by Ghana's reputable central bank, the Bank of Ghana. In its Monetary Policy Committee report for the third quarter of 2008 published in October 2008, it states that:

“Latest information points to continued momentum in economic activity over the year. The Bank's Composite Index of Economic Activity continues to show strong growth into the third quarter of 2008, recording an increase of 6.8 percent.

This represents an expansion by 25.4 per cent in year-on-year terms, and was above trend for the last years. The increase in the index was broad-based and reflected a growth in all the major sector-components.”

Echoing the view of the IEA on the performance of the real sector, the report said evidence from other real sector indicators also point to increased pace in economic activity.

Cement production for the first eight months of the year amounted to 1,649,190 metric tons, a growth of 17.1 per cent over the level of 1,408,083 metric tons for the same period in 2007.

“Benchmark retail sales recorded a growth of 40.3 per cent compared with sales for the same period in 2007. Labour market statistics showed relatively strong demand for labour with a total of 9,498 jobs advertised, compared with 5,980 for the same period in 2007.”

In its 44 paragraph report, the Bank of Ghana further said the generally strong performance of the economy reflected in the activities of the non-financial corporate sector.

“Financial data released by listed companies for the period ending September 2008 point to strong turnover and profit by companies in manufacturing, distribution, and agricultural activities, driven mainly by cost control measures and efficiency in operations and aggregate demand growth.”

Asked for his comments on these high marks for the country's economic performance, the Government Spokesperson on Finance and Economy, Mr Kwaku Kwarteng, said, “these testimonies confirm what government has always believed, that the economy has been doing well and would show resilience in the face of unprecedented external pressures.

    “Indications so far are that the 7.0 per cent real GDP growth for 2008 would be achieved and probably exceeded. That is good news for the economy.”

However, Mr. Kwarteng said the credit should not come to government alone. “I think the credit should go, first and foremost, to the millions of Ghanaians out there whose efforts have made these gains possible,” he added.