Ghana’s economy improved in the second quarter, however, the mining sector shrank for the sixth consecutive quarter.
Trade, manufacturing, information and communication, health and social services, and the agricultural sub-sectors were the key drivers of growth throughout this period.
The Ghanaian economy grew by 3.9% y/y in Q2-2021, up from 3.1% y/y in Q1-2021 and a decline of 5.7% y/y in Q2-2020, according to data from the Ghana Statistical Service (GSS).
- Non-oil growth increased to 5.2% y/y in Q1-2021, up from 4.6% y/y in Q1-2021. The agricultural sector (20.6 percent of GDP) expanded by 5.5 % y/y in Q2-2021, compared to 4.3% y/y in Q1-2021 and 5.6 percent y/y in Q2-2020.
- Agriculture growth was driven by the crops sub-sector which grew by 4.5% y/y during the period and contributed 81.4% to the sector (from 78.8% same period last year).
- The sub-sectors of fishing, forestry, and livestock all grew by 12.7%, 11.9%, and 5.7%, respectively.
- The services sector (50.3% of GDP) experienced strong growth, with annual growth of 11.0% y/y.
- The health & social work sub-sector recorded the strongest growth in the sub-sector, with 22.5% y/y. None of the sub-sectors in the services sector recorded contractions during the period under review.
- In contrast, after recovering from a recession in Q1-2020, the industry sector (29.1% of GDP) decreased in Q2-2021. The sector shrank by 4.3% in the three months leading up to June-2021, after expanding by 1.3% in Q1-2021 and contracting by 7.7% in Q2-2020.
- Although the sub-sectors of water & sewage (+20.5% y/y), electricity (+9.5% y/y), and manufacturing (+8.3% y/y) grew, the mining & quarrying sub-sector (the sector’s greatest contributor) continued to drag on total growth. In Q2-2021, the sub-sector shrank for the sixth consecutive quarter, falling 18.9% year over year.
What are experts saying?
According to experts for The Apakan Research Team, “We remain optimistic about a strong economic recovery of about 4.5% in 2021. We believe the monetary and fiscal authorities will continue to implement policies that are growth-supportive.
“Also, the pass-through effects of the 100bps monetary policy rate cut this year will be one of the key stimulators of Ghana’s economic recovery. On the industrial side, the recovery of the mining & quarrying sub-sector has stalled ostensively due to the prolonged effects of the COVID-19 pandemic on capital expenditure. A swift recovery in the sub-sector will further boost the economic recovery.
“For the rest of the year, we think favourable base effects could be supportive of growth although weighed down by the stalled recovery in the mining & quarrying sub-sector.”