Economy suffers first recession in 37 years

Ghana’s economy has recorded negative growth for the second consecutive quarter, data from the Ghana Statistical Service has indicated.

The economy contracted by 1.1 per cent in the third quarter after it contracted by 3.6 per cent in the second quarter.

This is the first time in over 30 years that the country’s economy has contracted on two consecutive quarters.

Speaking in an interview with the Daily Graphic, Head of the Economics Division at the Institute of Statistical, Social and Economic Research (ISSER), Professor Peter Quartey, said this meant that the Ghanaian economy was in recession.

“Once we have recorded two negative growth rates consecutively then we can say there is a recession,” he stated.

He said this was however expected, considering the economic impact of the COVID-19 pandemic.

“We are in the middle of a pandemic and we are not in normal times so this was expected,” he noted.

He said although the economy recorded negative growth for the second consecutive time, there was still some positive as it appears the negative growth rate was improving, considering that the negative growth rate for the second quarter was 3.6 per cent.

“If you look at the numbers, in 2020 quarter two, it was -3.6 per cent, but 2020 third quarter it was -1.1 so we can say the negative growth is improving and hopefully, we will see some marginal positive growth rate in the last quarter,” he explained.

Non-oil GDP

Economic growth without oil also contracted by 0.4 per cent which compares to a growth of 4.6 per cent in the same period in 2019.

The agriculture sector recorded the highest growth of 8.3 per cent in the third quarter. The industry sector contracted by 5.1 per cent, while the services sector contracted by 1.1 per cent.

Key sub-sectors that contracted in quarter three of 2020 included; hotel and restaurants which contracted by 62.1 per cent; mining and quarrying which contracted by 16.9 per cent; trade, repair of vehicle, household goods which contracted by 7.7 per cent; and forestry & logging which contracted by 6.8 per cent.

The main sub-sectors that expanded in quarter three of 2020 also included; information & communication which expanded by 51.3 per cent; fishing which grew by 20.4 per cent; real estate which also grew by 12.2 per cent and; electricity which expanded 11.6 per cent.

Real quarterly GDP

Presenting the third quarter data, Government Statistician, Professor Samuel Kobina Annim, said the GDP (Including Oil & Gas) estimate at constant 2013 prices for the 3rd quarter of 2020 was GH¢41.05 billion compared to GH¢41.51 billion the third quarter of 2019.

He said the non-oil GDP at constant 2013 prices for the 3rd quarter of 2020 was GH¢37.79 billion compared to GH¢37.95 billion for the same period in 2019.

Largest sector

He said the services sector was the largest sector of the Ghanaian economy in the third quarter of 2020 with a share of 42 per cent of GDP at basic prices.

The GDP share of industry and agriculture were 35 per cent and 23 per cent respectively.

Agriculture sector

In the Agriculture sector, the fishing sub-sector grew by 7.7 per cent in the 3rd quarter of 2020, compared to 0.05 per cent in the 2nd quarter of 2020.

The crop subsector also grew by 2.2 per cent compared to 0.6 per cent recorded in the 2nd quarter of 2020. The Llvestock sub-sector grew at a slightly lower rate of 1.1 per cent in the 3rd quarter of 2020, compared to a growth of 1.2 per cent in the 2nd quarter of 2020.

The forestry and logging subsector contracted by 1.8 per cent compared to a contraction of 2.1 per cent in the 2nd quarter of 2020.

Industry sector

Within the industry sector, the electricity sub-sector recorded a growth of 2.8 per cent in the 3rd quarter of 2020, compared to 3.5 per cent growth recorded in the 2nd quarter of 2020.

Water supply, sewerage, waste management & remediation activities sub-sector grew by 1.4 per cent in the 3rd quarter of 2020, compared to 2.4 per cent in the 2nd quarter of 2020.

Construction sub-sector grew by 1.0 per cent in 3rd quarter of 2020, compared to 0.9 per cent in the 2nd quarter of 2020.

Manufacturing recovered from a contraction of 3.6 per cent in 2nd quarter of 2020 to record a 1.1 per cent growth rate in the 3rd quarter of 2020.

The mining and quarrying sub-sector contracted by 4.5 per cent in the 3rd quarter of 2020, from -1.4 per cent recorded in the 2nd quarter of 2020.

Services sector

In the Services sector, information and communication grew by 8.2 per cent in the 3rd quarter of 2020 compared to 15.7 per cent in the 2nd quarter of 2020.

The real estate sub-sector also slowed to 3.2 per cent in the 3rd quarter of 2020 from 0.8 per cent recorded in the 2nd quarter of 2020.