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CEPAs Projected GDP Growth Rates for 2012

Posted by Business in Ghana on October 9, 2012

By http://www.cepa.org

In recent times the Ghana Statistical Service (GSS) has been processing and publishing more data on the economy than it was doing previously. More generally, rapid technological advancements, changes in data gathering, information processing and methodology have been numerous, especially with the rebasing of the national accounts. Commendable though these efforts have been, the rapid changes have more often than not led to frequent revisions of the data and sometimes withdrawal of published data on account of errors and omissions, which create undue embarrassment to the Service impacting negatively on its credibility.

The revision policy of the GSS with respect to the national accounts has been that while the majority of revisions/amendments are made to the four most recent quarters of a series, there is no restriction on when an estimate of a series for a given period will no longer be revised. This situation has sometimes created problems of data reconciliation and interpretation, but also brought into the open some of the technical challenges  mainly reflecting weaknesses or even inadequacy of capacity in research, methodology and analysis  that may be confronting the GSS.

A recent example is in respect of the agricultural sector growth performance: the GDP Newsletter for the first quarter of 2012 published by the GSS on June 27, 2012 reported a year-on-year decline in the growth rate of the agricultural sector of 2.9 percent in the first quarter; the revised data, which was published in September 2012, upgraded this to positive 5.4 percent growth (year-on-year) without explanation.

CEPAs position is that it is important that the GSS stays with its revision policy, but in doing so it is equally critical that it leads the general public through the revisions, showing how the latest position differs from earlier ones. Moreover, a strengthening of the research, methodology and analysis divisions of the GSS would go a long way towards avoiding some of the data pitfalls, reconciliation and interpretation issues that often impact negatively on the credibility of the Service.

According to the recently published national accounts data, the agricultural sector contracted by 0.1 percent in the second half of 2012, whilst the forestry, fisheries, and livestock subsectors registered declines. For the entire year, the GSS expects agricultural output to grow by 2.6 percent in real terms, with a turnaround in the growth performance of the fisheries subsector from negative 8.7 percent in 2011 to positive 2.3 percent in 2012; while the growth performance in the forestry and logging subsector declines further by (negative) 18 percent. What is particularly noteworthy in all of this is that even though the GSS estimates show an improvement in the growth of the agricultural sector compared to 2011 (0.8 percent), its contribution to the economy continues to decline, with its share reportedly reducing from 25.6 percent of GDP to 23.1 percent [Ghana Statistical Service: Provisional Gross Domestic Product 2012, September 2012, page 3; emphasis added].

At the same time, the Services sector, which is also the largest sector of the economy, is expected by the GSS to record the highest growth of 8.8 percent in 2012. Meanwhile, the expectation is for a deceleration of growth to 7 percent for the Industrial sector  the second largest sector with a share of 27.6 percent of GDP. Thus, on the basis of the revisions and the sharp slowdown in the second quarter, the GSS projects a halving of the overall real GDP growth in 2012 from the record 14.1 percent of 2011 to 7.1 percent.

CEPA finds the projected real GDP growth rate of 7.1 percent by the GSS rather pessimistic and expects an upward adjustment in subsequent revisions. In our view, the likely suspect is the projected contribution to economic growth from the oil subsector.

Oil production has been disappointing from the second half of 2011  the year marking Ghanas entry into the oil era. Various explanations have been provided for this unhappy state of affairs, including the fact that production commenced without gas infrastructure in place, and therefore resort has had to be made using the oil wells as storage for gas to avoid the need for flaring it. These production difficulties make projections of output difficult. This is the more so as expectations of the mining companies have proved over-optimistic and the date for reaching the peak production rate of 120,000 bopd appears to have proved two years beyond the original date of third quarter of 2011.

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One Response to “CEPAs Projected GDP Growth Rates for 2012”

  1. Benjamin said

    can we get firmer explanation of these revisions from GSS?

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