He said from a growth of 14.7 per cent in 2011, 8.8 per cent in 2012, 6.7 per cent in 2013 and 4.2 per cent in 2014, the country was set to grow at 3.5 per cent in 2015, if current conditions persisted.
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.
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.
“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.
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.”