An economist at the University of Ghana Business School, Dr. Patrick Asuming says the current socio-economic climate which is heavily influenced by the COVID-19 pandemic, provides government an opportunity to introduce and implement key reforms that will boost domestic revenue as well as economic growth.
Per the World Bank’s 2021 Global Economic Prospects report, even though growth in the Sub-saharan Africa region is forecasted to rebound to 2.7 percent in 2021, Ghana is only expected to grow by 1.4%.
Speaking to Citi Business News on ways to exceed the target of the Bretton Woods Institution, Dr. Asuming said the current period should be used by stakeholders to implement the needed regulatory reforms to boost tax collection when the economy gets unto a path of recovery.
Dr. Patrick Asuming also described the World Bank’s growth forecast for Ghana in 2021, as conservative.
“1.4% is a little conservative for a couple of reasons. So in their 2020 final projection, they had the economy growing at 1.1%. So in a year where there’s been COVID-19, and there’s been widespread shutdown of several types’ of economic activities, if the economy does 1.1%, then I would expect that in 2021 the number would have been a little bit higher than that.”
“So if assuming that the Coronavirus cases don’t spike, and we don’t see another shutdown, which I think is unlikely then I will expect that the economy will grow faster than the 1.4% that they are projecting.” “I would probably project maybe 2.5% to 3%, you know depending on what will happen with COVID-19. Even though we have vaccines we’ve seen that especially in Europe the cases are picking up and the lockdowns are coming back. Those lockdowns will obviously affect us. If we don’t see another lockdown on our own and businesses continue to operate and all the activities that were shutdown come back, I think we should be able to do 2.5%,” he added.
Ghana in technical recession after latest economic contraction
Economist with Databank, Courage Martey says Ghana has entered into a technical recession following a contraction of the economy for a second straight quarter in 2020.
Latest provisional figures released by the Ghana Statistical Service show that the Ghanaian economy has contracted for the second straight quarter, with the value of goods and services produced in the 3rd quarter of 2020 declining by 1.1 percent when compared to the value of goods and services produced in the same period in 2019.
The latest contraction according to the government statistician, Professor Samuel Kobina Annim was driven by negative growth in the industry and services sectors of the economy which both contracted by negative 5.1% and negative 1.1% respectively.
The Agriculture sector on the other hand recorded the highest growth of 8.3% in the 3rd quarter.
Courage Martey expressed his disappointment in the latest development in an interview with Citi Business news.
“Having contracted for the second consecutive quarter this year shows that technically we are in a recession. It tells you the depth of the scar that the COVID-19 pandemic has had on this economy. It is a bit disappointing because high-frequency data picked up from June indicated that economic activity was picking up steadily to the point where there was hope that we could be edged slightly into positive growth.”
Mr. Martey is however optimistic the economy will return to positive growth in the short-term if government sustains the implementation of key policy support programs for various sectors of the economy.
“If you look at the nature of the contraction in quarter three (-1.1 %), it is a slower contraction when compared to the one in quarter two (-3.2 %). It is a sign of improvement albeit quite slow. It leaves us with reason to be hopeful but also with a reason to continue policy support for the various sectors of the economy for us to emerge from this technical recession we find ourselves in.”