Ghana’s Second-Quarter Economic Growth Slowest in Two Years

  • Economy expanded 2.5% compared with 4.8% in previous quarter
  • Central bank says growth willl improve over ‘medium term’

Ghana’s economy grew at the slowest pace in two years in the second quarter as mining and oil output slumped.

Gross domestic product expanded 2.5 percent in the three months through June 30 from a year earlier, compared with a revised 4.8 percent in the previous quarter, Philomena Nyarko, government statistician at the Ghana Statistical Service, told reporters in the capital, Accra, on Wednesday. The economy grew 0.6 percent from the first three months of the year, she said.

Defects on the FPSO Kwame Nkrumah, the vessel used for production, storage and offloading crude at the Jubilee oil field, adversely affected crude oil and gas output in the first half of 2016, the Ministry of Finance said in July. Oil production fell 49 percent in the second quarter from a year earlier, Nyarko said.

“The FPSO was shut down, so that is causing the decline in oil and gas,” Nyarko said. “It was the major contributory factor to the fall in overall GDP growth.”

Industry, which includes mining, oil and gas production and accounts for about a quarter of GDP, contracted by 5 percent , the statistics office said. Farming output in the world’s second-biggest cocoa producer expanded 4.1 percent and services by 6 percent, it said.

The Ghanaian economy expanded 3.9 percent in 2015, the slowest pace in 15 years, according to International Monetary Fund data as the global slump in crude oil prices hit government revenue in West Africa’s second-largest economy. Growth will accelerate to between 4.1 percent and 4.3 percent this year as new oil projects start contributing to output, the finance ministry said in July.

“Growth conditions are expected to improve over the medium term supported by the sustained improvement in the power sector and increased oil and gas production,” Bank of Ghana Governor Abdul Nashiru Issahaku said on Sept. 19 as the central bank left the key lending rate at 26 percent. “The headwinds to growth include tighter fiscal consolidation, declining private-sector credit and delayed recovery in commodity prices.”

Ghana, which has presidential and parliamentary elections in December, agreed to an almost $1 billion program with the International Monetary Fund in April last year to help rein in the budget deficit and arrest declines in its currency, the cedi. The deficit may be 4.8 percent of GDP this year, the IMF said in May, compared with 6.7 percent in 2015. The nation raised $750 million in a Eurobond auction earlier this month.

— With assistance by Andre Janse Van Vuuren

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