Ghana’s economy, recorded a negative 3.4 percent in growth for the second quarter of this year for the first time in 37 years.
According to the Ghana Statistical Service (GSS), the heavy fall is largely attributed to some restrictions on activities in the economy, which virtually came to a standstill during the period as a result of the COVID-19 outbreak.
This comes on the heels of the recent downgrade of Ghana’s credit rating from B to B-negative by the international ratings agency, S&P Global, which the Ministry of Finance, has described as unfortunate.
With oil, the country recorded a 3.2 percent growth rate in the second quarter.
Speaking to journalists, the Government Statistician, Prof. Samuel Kobina Annim, said: “From the second quarter of 2020, Ghana’s economy has contracted by 3.2 percent from an oil perspective”.
“From a non-oil perspective, we also saw a contraction in the economy specifically for the second quarter of 2020.
“We saw our Gross Domestic Product (GDP) being GH¢35,590.4 million relative to GH¢36,839.7million that was recorded for the second quarter of 2019.
“For the first time in 37 years, Ghana’s economy has seen a contraction, which indicates that the last time the economy contracted was in 1983 and for emphasis, the oil sector contracted by 3.2 percent and the non-oil sector contracted by 3.4 percent.”
The fall in output was mostly felt in manufacturing and in the services sector, where hotels and restaurants were shuttered to stop the virus spreading.
“For the first time in 37 years, Ghana’s economy has seen a contraction of 3.2%, compared with a growth rate of 5.7% in the same quarter in 2019.”
Ghana’s finance minister has said in July that the economy was expected to grow at its slowest rate in 40 years, at around 0.9percent this year compared with a previous forecast of 6.8percent.
Ghana’s economy contracted for the first time in almost four decades in the second quarter, by an annual 3.2percent, as coronavirus restrictions stalled activity, the statistics office said on Wednesday.
The West African nation, a major producer of gold, oil and cocoa, imposed a three-week lockdown in March to halt the spread of the pandemic, forcing many businesses to close, government statistician, Samuel Kobina Annim told a news conference.
“Even after the restrictions have been lifted, many businesses across sectors have continued to close down,” Kobina Annim said.
Few days ago, the Ministry of Finance, in a press release on the country’s credit rating from B to B-negative by the international ratings agency, S&P Global,said that while it recognised that the downgrade was widespread, it found it disturbing that rating agencies would choose that path at a time when countries, including Ghana, were battling an unprecedented crisis.
“It is very unfortunate that rating agencies will choose to downgrade our countries in these unprecedented times,” the statement, issued by the Public Affairs Department of the Ministry of Finance, said.
“As the South African Revenue Services Commissioner recently argued: ‘While we understand the underlying factors that are pointed out by the ratings agencies, we think that during such a time of crisis, when the whole world is recalibrating and redefining its economic status, for any downgrades to be issued during this time is like kicking us when we are down’.
“We, therefore, call on rating agencies to seriously consider freezing any rating actions during global pandemics such as the COVID-19,” it added.
The statement was in response to a publication by S&P Global Ratings that communicated its decision to downgrade Ghana’s long-term foreign and local currency sovereign credit ratings to B-negative from B.
The agency, however, affirmed the short-term ratings at B, with the outlook being adjudged as stable.
The ministry said the lowering of the rating was mainly on account of the government’s decision to increase public spending to help contain the impact of the COVID-19 shock on lives and the economy.
It said a review of global credit ratings indicated that Ghana was not the only country to suffer a lowering of sovereign credit ratings, noting that more than 80 countries had been affected, with negative outlook revisions for the year being more than 100.
“Most of these credit rating downgrades and negative outlook revisions are heavily concentrated on the countries who previously were at B/B2 credit ratings,” it said.
“These adverse rating actions have touched almost all continents, as rating agencies react to the effects of the pandemic on the global economy,” it said.
The ministry said the government was focused on saving lives and livelihoods, and that required some temporary fiscal and economic adjustments, including some one-off expenditures.
“The government chose to save lives and, therefore, instituted temporary life-saving initiatives and interventions aimed at protecting the general population against the negative economic effects of the pandemic,” it said, and mentioned the interventions to include subsidies on water and electricity to support
vulnerable households during the lockdown period. “The government also provided credit for micro, small and medium enterprises (MSMEs) whose businesses were most impacted by the lockdown,” it said.
It noted that in spite of the interventions, the economic fundamentals remained strong and recovery prospects were high. That, it said, was reflected in the positive narrative on how Ghana had managed the economy under the pandemic.
It said, the government had a clear path towards the restoration of economic stability in the short to medium term. It said it would sustain the progress made and accelerate it through the GH¢100 billion Ghana CARES transformation programme within the general policy framework of the Ghana Beyond Aid and beyond the pandemic.