Ghana: Economy rounds off 2018 with solid performance in Q4, although loses some momentum
The economy logged a robust performance in the final quarter of 2018, although the pace of expansion moderated somewhat. GDP growth fell to 6.8% on an annual basis in Q4, down from Q3’s one-year high of 7.4%. The drop was due to a more notable downturn in the oil and gas sector, while non-oil activity sustained a strong expansion. Overall, the economy lost pace in 2018, with full-year growth declining to 6.3% (2017: +8.1%).
A breakdown by production showed that the industrial sector logged the best performance among the three key sectors, although lost speed from the third quarter, reflecting a wider slowdown in global industry (Q4: +8.9% year-on-year; Q3: +11.7% yoy). A sharper contraction in the energy sector amid a fall in oil prices and a marked slowdown in manufacturing activity, as growth cooled in key trading partners, chiefly drove the deceleration. In addition, growth of the agricultural sector also weakened, from 5.5% in Q3 to 4.4%, as the hot, dry weather conditions weighed on output.
On the other hand, the services sector picked up, expanding 5.8% annually in Q4, from 3.5% in Q3. This suggests robust domestic demand dynamics. Financial and insurance activities rebounded, while trade, repair of vehicles, household goods; information and communication; and public administration sub-sectors accelerated.
Meanwhile, in quarter-on-quarter, seasonally-adjusted terms, the economy slowed slightly: GDP grew 1.7% over the previous quarter in Q4, down from Q3’s 1.8% upturn.
Looking ahead, the economy should sustain a strong pace of expansion again this year, thanks to higher export growth and solid domestic demand. A surge in government spending on increased infrastructure development, however, raises uncertainties around fiscal discipline, now that Ghana has exited its four-year long IMF program.