Ghana’s economy has slumped into recession following the contraction of the economy in two consecutive quarters, according to a Ghanaian business newspaper, citing data released by the Ghana Statistical Service.
The Ghanaian economy contracted by 3.1 percent in the second quarter of 2020 and 1.1 percent in the third quarter of 2020, sending the economy into recession for the first time in 40 years, according to the Business and Financial Times. The last time Ghana went into recession was in 1983, which was occasioned by political instability, famine and other economic unrests.
The report attributed the third-quarter contraction to the coronavirus pandemic which largely affected the hospitality industry, resulting in a 62.1 percent contraction of the sector. Ghana in the early part of the year went into a lockdown, which resulted in hotels and restaurants closing down. Also, within the same quarter, the mining and quarrying sector, contracted by 16.9 percent.
In the real sector of the economy, agriculture was the only sector that witnessed growth, recording a growth of 8.3 percent growth from the previous quarter’s performance of 2.5 percent. Industry and services contracted by 5.1 and 1.1 percent respectively in the third quarter.
In a series of tweets, Ghana’s former Finance Minister, Seth Terkper, said Ghana’s current economic situation cannot be attributed to the pandemic, adding that any suggestion in that regard will amount to not considering other factors.
“Any attempt to blame COVID-19 in TOTAL unfair: COVIzD cost 3% of GDP & 3 oil fields to [have] boosted investment & budget & debt buffers via PRMA. We were on [a] consumption binge, ignored warning signs in “parallel” reporting to hide stress,” he tweeted. “We downplayed past management &downturns by past [governments] as ‘non-performance’. The climb back will be tough, with close to 80% debt & 15%+ deficit. Oil prices recovering though.”
Despite the country’s current gloomy economic figures, the economy is expected to grow by 1.9 percent in the first quarter of 2021, against the IMF’s forecast of 0.9 percent. This, the Business and Financial Times newspaper says, comes on the back of the launch of the ambitious GH¢100 billion Ghana COVID-19 Alleviation and Revitalisation Enterprises Support (Ghana CARES) program.
The program dubbed “Obaatan Pa”, which seeks to raise 70 percent of its financing from the private sector and the remainder from the government, will assist businesses struggling to cope with the effect of the pandemic.