The government Statistician, Prof. Samuel Kobina Annim has expressed as too hasty the conclusion that, 2020 is a year of recession for the country, although he acknowledged that the last two quarters have seen the economy contract.
Speaking in an interview yesterday, December 17, 2020, the government Statistician explained that there are two time perspectives to be considered when tackling the issue of recession; quarterly basis and annual basis.
“Currently, we have released three quarters of 2020, the first quarter of 2020 puts our growth rate at 4.9% and subsequently in the second quarter there was a contraction of 3.2% and in the third quarter we’ve seen another contraction of 1.1%. We are in the process of collecting data for the last quarter of 2020 and we have some data for October and November already.”
“So, I will be hesitant in drawing a conclusion that, if we are doing the annual GDP for 2020 at this point in time, one can conclusively say that on an annual basis we are in a recession. But clearly, from a quarterly point of view, that is comparing 2019 Q2 with 2020 Q2 and also comparing 2020 Q3 with 2019 Q3, on both counts we see that the economy has contracted. ”
“… from both a quarter-on-quarter basis and year-on-year basis we’ve seen that the economy has contracted, but as I indicated for emphasis, for the whole 2020 to be declared as a year of recession, one has to be circumspect.”
He further reiterated that, “although we’ve had three quarters and we’ve seen that two of the three quarters are in contraction, one has to take into consideration, the absolute figures and how the different sub-sectors will particularly play out in the last quarter of 2020.”
In his view, Prof. Bokpin, an Economist and Senior Lecturer at the University of Ghana indicated that, although the economy contracted again in the third quarter, this is relatively not bad and much more so, it was anticipated.
He explained that this could be credited to the mixture of fiscal and monetary policies that were quickly deployed in response to the impact of the COVID-19 and to a large extent, the lingering effects of the energy and financial sector crisis that the country suffered.
He further concurred that it was early days yet to declare 2020 as a year of recession, given the challenges with reliable data that the Ghana Statistical Service has had to deal with. Going forward, he believes that some revisions may be made as the Service bridges the data gap.
However, he added that, the contraction of the economy shows the prudence government must attach to the kind of expenditures to be made, now that elections are over, in terms of the management of the fiscal space complemented by monetary policy.
“…there are challenges ahead, if you look at the fiscal space. We practically don’t have fiscal space to do some huge investments in the economy to boost economic activity. And then again, you have to look at the quality of the recovery also. Is it recovery that is job-based or the usual jobless growth that we have seen over the years?”
Recovery in the fourth quarter hopeful but…
Furthermore, Prof. Samuel Kobina Annim intimated that the GDP growth rate could rebound rather than contract for the next quarter. He, however, said that caution must be exercised regards the sub-sectors that are going to drive this growth.
“… one of the things we need to emphasize on has to do with the variations across the sectors, so what we are currently seeing is that the contraction has been mainly driven by the industry sector that shrank by 5.1% and also the services sector [the economy is Service led] shrank by 1.1% and these two contractions from the Industry and Services sector did offset the 8.3% increase in the Agriculture sector which was mainly driven by crops.
“…and if it is the Industry sector and the Services sector that are going to drive our contraction, then the numbers in itself would have to be looked at, not only from the sector point of view but from the sub-sectors perspective.”
Therefore, for a recovery to be possible, it largely depends on the interventions that will be rolled out by the government and the sectors that are receiving these interventions. Again, one is not too certain about people’s reaction towards the just ended elections as well as the festive period that is ahead.
“December is always a tricky month because it’s a festive period and one would have to be careful in saying that it will follow the trends during a non-election year.”
Prof. Bokpin, also noted that there is the need for moderation with our expectations.
“…just focusing at the broader level and the kind of interventions that we have done so far, perhaps may be the reason why we are not seeing the response that much, so we have to be cautious. But the question that we need to ask ourselves is that, what kind of recovery are we anticipating, the quality of that recovery. If recovery that aggressively tackles inequality will be the way to go, then in that case you would have to look at where the interventions will have to go to engineer growth that will come along with quality and sustainable job creation. That is very fundamental for us.”
While there are indications of a recovery of businesses due to the ease of restrictions later this year, Dr. Samuel Ankrah, the CEO of Africa Investment Group and a business man intimated that businesses are not experiencing a commensurate increase in growth.
He, therefore indicated that the government must put in place necessary steps to ensure that there is an enabling environment for businesses to grow, including government laying the right infrastructure and employing the right policies.
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