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Economist warns of economic recession
Prof. Quartey said Ghana is over relying on the oil sector which has resulted in slow growth in the agric and industrial sectors of the economy.
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He said Ghana will “suffer” if dependence on oil continued in an interview with Citi FM Tuesday.
“If you look at our GDP [Gross Domestic Product] growth, you will realise services is over 60 percent of GDP. Industry and agriculture then shared the rest," he said, adding: “Over time, agriculture and industry have taken smaller share of our GDP while services expand.”
He continued: “We’ve intended to rely on oil over the years…GDP including oil declined whereas GDP of non-oil was slightly higher than oil.
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“What this tells us clear is that if we over-rely on oil, we may have challenges just like Nigeria.”
His comments follow the publication of a report by the Institute of Statistical, Social and Research which said the country’s GDP growth declined last year.
The decline, the report said, continued the dwindling economic growth rate since 2011.
He said the economy of Nigeria slid into recession because of its reliance on oil.
“If we don’t learn from this experience we are likely to face economic recession in the immediate future,” he added.
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Moody’s yesterday defined Ghana’s economic outlook as positive, affirming it with a three B1 rating.
But Prof Quartey explained that Moody’s rating is based on the “IMF presence.”
Ghana has signed onto a three-year aid package deal with the International Monetary Fund (IMF) which is expected to end in 2017.
“They are basically relying on the budget deficit. In 2012 if you will recall was over 12 percent of GDP,” he said. “Currently it has been reduced considerably. Base on that, that is how come they [Moody’s] tell us that we have a stable outlook.”
He said, “that does not mean that key productive sectors of the economy are doing quite well or doing quite better.”
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He urged policy makers to shift focus from the oil sector to the agric and industrial sector “so that when we have exhausted our oil, we will not be found wanting.”
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