Ghana: Growth jumps to over two-year high in Q4 2019; 2020 outlook sours
Annual growth accelerated to 7.9% in the fourth quarter of last year, according to national accounts data released by Ghana’s Statistical Institute on 22 April. The print was significantly above the third quarter’s 5.6% increase and marked the strongest expansion since Q3 2017. Similarly, in quarter-on-quarter seasonally-adjusted terms, growth picked up to 1.9% in Q4, from Q3’s 1.4%. The fourth-quarter outturn brought annual growth for whole year of 2019 to 6.5% (2018: +6.0% year-on-year).
The fourth-quarter acceleration was chiefly spearheaded by a quickening expansion in the services sector, where activity grew at the strongest pace since quarterly records began in 2014 (Q4: +11.0% yoy; Q3: +5.7% yoy). In a similar fashion, agricultural output growth clocked in at an over two-year high at the end of 2019 (Q4: +6.8% yoy; Q3: +5.9% yoy), further supporting the overall outturn. On a slightly less positive note, the industrial sector continued to lose traction in the same period (Q4: +5.4% yoy; Q3: +5.7% yoy), amid contracting construction activity, marking the fifth consecutive quarter of deceleration and the softest output growth since Q2 2016.
Looking ahead, the economy is set for a major downturn this year caused by the global disruption associated with the Covid-19 pandemic. The external sector stands to be particularly hard hit amid collapsing cocoa and crude oil prices, and faltering global trade links. On the domestic front, lockdown measures introduced by the government on 30 March are seen dampening investment and hurting consumer spending in the months to come. Against this backdrop, the government announced an stimulus package totaling approximately USD 310 million to support key industries, small businesses and employment.
Commenting on the quarterly result, Dylan Smith and Andrew Matheny, economists at Goldman Sachs, paint a gloomy picture for the 2020 growth outlook:
“Today’s positive surprise is overshadowed by the looming growth impact stemming from the triple shock of COVID-19, which has dampened external demand, forced restrictions on domestic activity, and negatively impacted Ghana’s terms-of-trade on balance. We expect growth to fall to 0% in 2020.”