Dr. Isaac Doku, an Economist and Lecturer at the University of Education, Winneba, has advised government to lower its expectations about the rebound of the economy by revising 2022 GDP growth forecast downwards.
The Economist warned government against revising the country’s growth forecast upwards as an earlier statement from the Ministry of Finance suggested. He expects growth to be cut by about 1.3 percentage points, down from the original forecast of 5.8% for the 2022 fiscal year because government is likely to miss this target.
“All our cost is hinged around crude. Government needs to do something about regulating the prices. If price keeps on skyrocketing like this, there is no way we will be able to realize that growth. There is no need to revise it upwards. The 5.8%, even if they are going to revise, it should be revised downwards to something like 4.5%. Unless government is willing to put in measures but looking at the trend of events, government is not saying anything”.
Dr. Isaac Doku
Dr. Doku lamented that cost of production is rising because of the sharp rise in crude prices and a lot of companies have shut operations and more are considering closing down because cost of raw materials have increased.
“Recently, I was listening to one poultry farmer who said cost of feed is going up because of the rate at which prices of maize, wheat and all those stuffs are going up. The cost of production is increasing too much. Some are thinking of closing down their farms and businesses. So far as cost of production is increasing, producers cannot breakeven not to think of increasing production”.
Dr. Isaac Doku
Speaking to the Vaultz News, Dr. Doku said things are currently getting worse which may reflect in the GDP figures going forward “unless government is going to do something”.
Showdown in economy not surprising
Commenting on the recently released growth statistics, Dr. Opoku said “I’m not surprised” that growth is slowing down. He explained that even though the services sector remains the major contributor to the country’s GDP, the “telecommunications sub-sector that is expected to be topping is now not topping”.
“This e-levy has brought it down… I don’t know if you have seen that MoMo transactions have reduced by 20%. Automatically, it tells you that the communications part of the services sector is seeing a downturn. So, things are not going well”.
Dr. Isaac Doku
Despite the growth in the Agriculture sector, Dr. Doku indicated that the shortage of fertilizer due to the ongoing war between Russia and Ukraine, is having a massive toll on farmers. He indicated that this was the reason why the sector did not expand as expected.
“The Russia-Ukraine war is having a toll on the sector to some extent, because we are having fertilizer shortage now. In terms of sectors, Agric is the third and it’s not responding as we expect it to be. For me, from where I stand, that’s what I see”.
Dr. Isaac Doku
Dr. Doku therefore, urged the government to scale-up efforts to invest in the agriculture sector so as to make Ghana food sufficient to reduce the country’s reliance on the importation of food. He indicated that if government is not willing to reduce prices on petroleum products, it should concentrate on strengthening the agric sector to increase food supply which will eventually drive down prices of food on the market.
In 2021, government recorded a growth rate of 5.4%, higher than its projections of 4.4% by a 1 percentage point. Based on that performance, the Ministry of Finance issued a statement that it was going to revise the current growth forecast of 5.8% for 2022 to reflect the stronger-than-expected rebound.
However, recent data released by the Ghana Statistical Service show that growth is slowing down. From 7.0% in Q4, 2021, growth reduced to 3.3% in Q1, 2022. This is lower than the 3.6% recorded in the first quarter of 2021.
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