‘Future of national economy bleak’
By Edmund
Smith-Asante, ACCRA
 |
| Prof Ewusi delivering the lecture |
The Dean
of Graduate Studies at the Methodist University College, Professor Kodwo Ewusi,
has stated that the future of Ghana’s economy looks bleak, due to its bad
performance over the past few years.
Delivering
a lecture on the theme: “Human Capital and Economic Growth in Ghana” at the
48th Danquah Memorial Lectures last Wednesday, Prof. Ewusi, an economist and
statistician, said: “The euphoria of rapid economic growth from the start of
oil production at the Jubilee Field has dissipated.”
“Ghana’s
economy is now bedevilled with double digit inflation, double digit interest
rate, double digit depreciation of the cedi, double digit unemployment,
unsustainable fiscal policies and trade deficits. The state of the economy is
not good,” he stressed.
Growth decline
Prof.
Ewusi said in the real sector, the growth of non-oil Gross Domestic Product
(GDP) declined from 6.7 per cent in 2013 to 4.1 per cent, while the
agricultural sector, which in 2014 experienced the fastest growth of 5.2 per
cent, lost its share in real GDP from 23 per cent in 2013, to 21 per cent in
2014.
“Similarly,
the growth of the services sector decreased from 10.3 per cent in 2013 to 3.9
per cent in 2014. The industrial sector declined by almost 50 percentage
points, from 6.6 per cent in 2013, to 3.9 per cent in 2014,” he said.
Deficits, debt and depreciation
Prof. Ewusi
stated that there was also not much improvement in the external sector, with
merchandise trade, current account and overall balance of payment registering
negative balances.
“The
deficit on merchandise trade in 2014 was $1.6 billion; current account deficit
was $3.6 billion, overall balance of payment stood at a deficit of $85.2
million in 2014,” he said.
He added
that the external debt of the country rose from $11.5 billion in 2013 to $13
billion in 2014, while at the end of January 2015, gross international reserves
stood at $4.9 billion, representing only 2.8 months of imports.
According
to Prof. Ewusi, the cumulative depreciation of the cedi for 2014 was 31.2 per
cent, compared with 14.5 per cent in 2013.
He said
the primary data on the government’s budget for 2014 indicated that the revenue
grants of the government amounted to 16.6 per cent of GDP, while spending
amounted to 23.2 per cent.
The
results showed a budget deficit equivalent to seven per cent of GDP, he said,
adding that the development in the government’s budget had affected the country
and explained that it was in view of that development that the rating agency,
Fitch, downgraded the country’s long-term foreign and local currency rating
from B+ to B.
Prof.
Ewusi said domestic debt also rose from GH¢26.7 billion in 2013 to GH¢34.6
billion in 2014.
“In fact,
the total debt as reported stands at about 69.5 per cent of GDP. The total
public debt for 2014 amounted to GH¢76.1 billion and that represented 67.1 per
cent of GDP,” he added.
Gloom
Reiterating
that the economy was not doing well, Prof. Ewusi said infrastructural
shortcomings remained a blight on Ghana’s business environment, with energy and
water being the areas of concern.
“If the
situation doesn’t change, factories cannot produce as they did last year and if
last year the growth was 4.2 per cent, then definitely this year, it will be
below 4.2 per cent. Unless the infrastructural problems of water and light are
solved, small-scale enterprises are folding up and they will continue to fold.
Even large-scale enterprises will cut down on production,” he said.
He,
however, stated that the outlook could change for medium-term enterprises,
adding that the 2016 elections should focus on who will better manage Ghana’s
oil resources.
Middle-income status
Prof.
Ewusi said judging from Ghana’s performance, the country attained middle-income
status much earlier than the year 2010 when it was declared.
He said
the country’s per capita income in 2006 was $929. “According to the figures
released for 2006, the cut-off point for the middle-income level was $905 and
we had $929,” he said.
He
recounted with nostalgia the 1970s when Sanyo and ‘Akasanoma’ radios were
manufactured in Tema, and said: “Ghana’s middle-income status must be reflected
at a high level of industrialisation.”
Writer’s
email: edmund.asante@graphic.com.gh
This story was first published by
the Daily Graphic on February 27,
2015
Comments
Post a Comment