by Shao Haijun and Justice Lee Adoboe
ACCRA, July 14 (Xinhua) -- Ghana has gained a robust economy in the first half of the year but there is a need to deal with fiscal and monetary issues in the following half year.
According to the Ghana Statistical Service (GSS), the country's economy expanded by 8.7 percent year-on-year in the first quarter of this year on strong industrial performance, coupled with sustained growth in the services sector.
The 21.7 percent growth recorded by the industrial sector had huge contributions from the mining and quarrying sectors, which included oil and gas production.
With a 48 percent share of Gross Domestic Product (GDP), Services grew by 5.7 percent, with personal service activities, business services, and transport and storage activities making strong contributions.
This growth was preceded by similar good records in the last quarter of 2011 at 16 percent and an overall annual GDP estimate of 14.4 percent, making Ghana one of the fastest growing economies in the world and the fastest in Africa.
Ghana's foremost economic policy think-tank Center for Policy Analysis (CEPA) estimates, on the basis of the data released by the GSS, that for the 12 month period ending first quarter of 2012, the overall growth rate accelerated to an annual rate of 15.5 percent.
But there were still risks for Ghana's macroeconomic stability which can be sorted into fiscal and monetary terms.
"After Ghana's very successful economic performance in 2011, with growth of 14.5 percent and inflation in single digits, risks to macroeconomic stability are rising," Christina Daseking, a mission leader from the International Monetary Fund (IMF), said in a statement after her delegation's two weeks visit in Ghana in May.
She also cautioned the Ghanaian government that "some spending obligations from 2011 were carried over into 2012, and new spending pressures have emerged from the agreed 18 percent public sector wage hike and the rising cost of fuel subsidies."
Debt is also imposing a heavy burden to the western country's economy. Local media quoted Bank of Ghana's governor K.B Amissah- Arthur as saying Ghana's total public debt stock from 8.8 billion Ghana cedis (about 5 billion U.S. dollars) in 2008 to 25.8 billion Ghana cedis (about 14.7 billion U.S. dollars) as at April 2012, representing a 193 percent increase.
Concerning to the monetary side, the depreciation of Ghana's currency cedi has raised the expectation of inflation.
According to Bank of Ghana (BoG), Ghana cedi has depreciated 15 percent against U.S. dollar since January. This led to the price of imported products rises obviously and imposed high upward pressure to the whole price level.
Although the BoG targeted an average inflation rate of 8.7 for 2012 and an end-year figure of 8.5 percent, this has increased gradually from 8.58 percent last December to 9.4 percent in June 2012.
The BOG responded to this renewed rise in inflationary risk by raising its policy rate cumulatively from 12.5 percent in February to 15 percent in June.
Acting Deputy Government Statistician Kofi Agyeman-Manu signaled earlier in the week that high inflationary trends would peak around June and July and begin to ease downwards in August, September and October.
Another challenge facing GDP growth this year has been the lower performance of the oil production sector under Industry.
Although the slight shortfall in oil production for the first quarter was compensated for by the increased gold and bauxite production, first half estimates of oil production painted a more worrying picture.
In the estimation of lead producer Tullow Oil plc, as cited by CEPA, 2012 is not expected to be spectacular; therefore, the contribution of the oil subsector is estimated at a poor 0.9 percentage points of non-oil GDP.
In the first half of the year, CEPA said field production had averaged 63,100 barrels of oil per day (bopd) and was currently producing 63,000 bopd, with a number of wells temporarily off line for ongoing acid stimulation activity.
It said the field was expected to exit 2012 with a gross production rate in excess of 90,000 bopd as it ramps up to plateau production in 2013.
These challenges notwithstanding, economist Sam Mensah believed that the economy had so many strong points that must be capitalized on to continue to bolster confidence in the economy.
"Ghana is a resource-rich country, with more resources than the average country in the world; we have natural resources; we have a stable political system; we have hiccups here and there but, compared to most countries, we are a very stable political economy, " he argued.