IEA disputes NPP growth 'miracle'

Dr Anaman speaks to Joy Fm's Matilda Asante

The Institute of Economic Affairs (IEA) has described as inaccurate claims by the ruling new Patriotic Party that the size of the Ghanaian economy has quadrupled over the last eight years.

According to the economic think-think, the real size of the economy has grown by 54 percent contrary to the 300 percent put out by some politicians.

GDP is the sum of consumer expenditure, business investment, government expenditure, and exports. Nominal GDP (also called money GDP) is a measure of money spent. Real GDP corrects the gross nominal GDP figure for inflation, making real GDP more useful for historical comparison.

The NPP's vice presidential nominee, and former deputy governor of the Bank of Ghana, Dr Mahamudu Bawumia has said the economy has grown by a multiple of four since President Kufuor assumed power, saying the national income is about $16bn.

But an analysis of the growth of the economy by the IEA puts the real gross domestic product (GDP), which is a measure of economic growth at about $2.7bn in 2000 and about $4.1bn in 2008, representing a growth of 54 percent.

In an interview with Joy News, the head of the economic unit at the IEA, Dr Kwabena Anaman, said growth of an economy is measured by “real gross domestic product” which currently holds only 54% for Ghana.

He maintained that the figure put out by Dr Bawumia was the “nominal gross domestic product” which has inflation as a determining factor.

“The economy has expanded by 54 percent in real terms; the 246 percent that is being ascribed…is just increases in prices, and that is what we are trying to correct,” he stated.

The economist said the 246 percentage figure is only a nominal figure and does not represent the real issues on the ground.

“If you want to measure real GDP, you have to factor prices out “and we use a base year, and if you use a base year of 2000 and give it a figure of 100 the current volume of production is 154 so it's gone up by 54 percent and not 300 percent,” he stated.

On per capita income, which is the average income for each person in Ghana, Dr Anaman said calculations are based on real GDP and not the nominal figure.

“No country can quadruple its real GDP in eight years, it's not possible,” he said.

Play attached audio for excerpts of Joy News' interview with Dr Anaman
Story by Fiifi Koomson