The country’s services sector contracted by 1.1 percent year-on -year in the third quarter of the year.
The contraction was driven by a decline in the Trade, Repair of Vehicles, Household Goods; and Hotels and Restaurants sub sectors which shrunk by 7.7 percent and 62.1 percent respectively year -on -year.
These sub-sectors contracted by 7.7 % and 62.1% year-on-year respectively in Q3 this year.
The services sector has been the hardest hit sector by the current pandemic in almost all economies around the world.
The year-on-year performance of the services sector in Q3 was, however, an improvement over the previous quarter which saw services shrunk by 2.6%, the worst since the second quarter of 2015.
Compared to the second quarter in which 4 of the 11 sub-sectors contracted due to the measures put in place to curb the spread of the virus, only 2 of the sub-sectors contracted in the third quarter on a year-on-year basis.
However, the negative growth of total value added in these 2 sub-sectors was enough to keep the services sector’s growth in the negative.
Similarly, the overall performance of the services sector in Q2 mirrored the performance of the Trade, Repair of Vehicles, Household Goods; and Hotels and Restaurants sub-sectors which contracted by 20.2 % and 79.4 % year-on-year in the second quarter.
Contrary to the developments of the two sectors on a year-on-year basis, the quarter-on-quarter analyses show that there was a tremendous increase in value-added in Trade, Repair of Vehicles, Household Goods; and Hotels and Restaurants sub-sectors in Q3 2020 compared to Q2 2020.
From a negative growth of -13.7 % in Q2 2020, the Trade, Repair of Vehicles, Household Goods sub-sector recorded an expansion of 10.7 % in Q3 2020 quarterly.
Similarly, on a quarter-on-quarter basis, the Hotels and Restaurants sub-sector expanded by 80.7% in Q3 2020 over Q2. This is an improvement from the negative growth of -80.3 % that was recorded in Q2 measured against performance in Q1 2020.
The Transport & Storage sub-sector however recorded negative growth of -5.8 % in Q3 2020 akin to -7.1 % recorded in the second quarter per the quarterly analyses. The Information & Communication sub-sector contracted by 24.4 % in Q3 compared to an expansion of 10.2 % in Q2 2020 on a quarter-on-quarter basis.
Financial & Insurance Activities also recorded the second successive quarter-on-quarter contraction in the year. The sub-sector which plunged by 1.7 % in Q2 2020 now recorded a much deeper contraction of 14.4 % in Q3 2020.
Professional, Administrative & Support Service activities sub-sector is one of the sub-sectors that continue to record positive growth rates amid the pandemic. From a growth rate of 14.2 % in Q2, activities in this sub-sector expanded by 22.2 % in the third quarter of the year. This sub-sector by far is the best performing sub-sector within the services sector during the COVID period.
Another sub-sector that continue to bear the brunt of the COVID-19 is the Education sub-sector. The closure of schools to full-time academic work since March this year has impacted heavily on the education sub-sector. Despite showing some resilience in the first two quarters of the year, the sub-sector contracted by 7.6 % in Q3 2020 compared to a growth of 20.7% recorded in Q2 2020.
Nonetheless, activities in this sub-sector are expected to rebound once schools re-open in January 2021.
Services have been the main contributor to Ghana’s Gross Domestic Product (GDP), contributing 42.2% of GDP in Q3 2020.
Despite the mixed performances by the various sub-sectors on quarterly and yearly levels, the overall growth rate of value-added in the sector shows that activities have picked up significantly between July and September this year especially in two major sub-sectors.
Regardless of the optimism, the recent statistics show that the Hotels and Restaurants sub-sector continues to record lower patronage despite the lifting of restrictions that allow operators of these facilities to operate. It is expected that the recent indicators that point to a rebound of economic activities will trickle down into the services sector in the last quarter of the year.
