The economy expanded by 0.4 per cent last year, the lowest in more than three decades as the COVID-19 pandemic ravaged economic activities and distracted livelihoods throughout 2020.
Data released by the Ghana Statistical Service (GSS) also showed that the economy had returned to the path of growth in the fourth quarter of last year after suffering contractions in the previous two quarters.
The provisional data on the performance of gross domestic product (GDP) was released by the Government Statistician, Prof. Samuel Kobina Annim, at a news conference today.
It further showed that the economy was now worth GH¢404.87 billion, up from the 2019 estimate of GH¢350.79 billion.
An economist, Dr Said Boakye, said while the 0.4 per cent annual growth rate was “surprisingly low,” it was comforting that the economy did not suffer negative growth.
“The good news is that it is positive but it is not strong enough to send a good signal to the market that we are on our way out of the woods,” Dr Boakye, who is the Head of Research at fiscal policy institute, the Institute for Fiscal Studies (IFS), said.
“I expected it to have been higher, around one per cent, but at 0.4 per cent and with the current fiscal situation, then the signals are not good,” he added.
The 2020 provisional growth rate of 0.4 per cent is lower than the government’s target of 0.9 per cent for that year.
By that growth rate, Ghana has also outperformed the likes of Nigeria, Botswana, Sierra Leon and Togo, whose economies either contracted or flattened in the pandemic ravaged year.
However, it trailed those of Cote d’Ivoire, Kenya, Ethiopia, Malawi and Rwanda, where growth rates ranged between 0.5 per cent and 4.1 per cent.
The 2020 annual GDP data showed that agriculture was the major growth driver of, posting a growth rate of 7.2 per cent followed by the services sector, which grew by 1.5 per cent.
The industry sector contracted by 3.6 per cent, largely on account of substantial contraction in growth in the mining and quarrying subsector. The subsector contracted by 11 per cent.
In the subsectors, the information & communication sub-sector recorded the highest year-on-year GDP growth rate of 22.5 per cent while the hotel & restaurants activities sub-sector suffered the lowest growth rate, with a contraction of 34.8 per cent.
Dr Boakye said the low growth rate recorded for 2020 could undermine the government’s growth target for 2021.
“If you were not able to meet the 2020 target of 0.9 per cent, what is the guarantee that you can meet the 2021 target of five per cent? A higher growth rate for last year would have given the needed confidence,” he added.
He said it also risked complicating the fiscal situation, given the impact of strong growth on revenues and the deficit.
He said a slower-than-projected GDP growth meant that increased borrowing would be needed to make up for revenue shortfalls, thereby exposing the fiscal situation to further deteriorations.
He advised the government remain calm and support productive sectors with funding and policies and prop up growth in 2021 and beyond.
Fourth quarter GDP
Meanwhile, the economy expanded by 0.8 per cent between October and December last year compared to the second and third quarters of 2020 when it contracted by 0.8 per cent and 3.2 per cent respectively.
GSS data showed that the fourth quarter growth rate was largely driven by strong growth in the agricultural sector and bolstered by a positive showing in the service sector.
The agricultural grew by 8.2 per cent while the service sector expanded by 4.6 per cent.
The industry sector, however, contracted by 0.4 per cent in spite of a 14.2 per cent growth rate recorded in the manufacturing subsector, according to the data.
The data also revised the third quarter growth rate from the earlier negative 1.1 per cent to negative 0.8 per cent