World Economic outlook - Ghana GDP growth down q3 2011 : Ghana's unadjusted GDP growth fell to 12 percent year-on-year in the third quarter of 2011 from a revised 17.6 percent in the second quarter of 2011, Ghana's statistics office said on Wednesday.
The deceleration in one of West Africa's fastest growing economies and newest oil producer came as a surprise with analysts saying it was not immediately evident what had led to the slowdown.
Nalini Cundapen, Emerging Markets strategist at Societe Generale, said that although the figure was lower than market expectations of 13.8 percent, it was still a solid growth.
Philomena Nyarko, Ghana deputy government statistician said Ghana's economy witnessed “significant” declines in net indirect taxes, fishing, financial and insurance activities that led to the drop in growth, compared with the second quarter.
“Net indirect taxes recorded negative 33.4 percent and this was enough reason for the shortfall,” Nyarko told a news conference.
Standard Chartered analyst Razia Khan said the slowdown was unlikely to have been caused by Ghana re-adjusting its growth figure from a high base last year or technical problems which has hobbled the country's oil production hitting the targeted 120,000 bpd.
“Clearly, technical difficulties with oil production started to weigh more heavily in Q3 2011 - with Ghana's oil production not rising to 120 000 bpd as had been hoped,” Khan said. “But even so - this is a factor more likely to impact on quarter-on-quarter growth, than the year-on-year print.”
Khan said the GDP figure was unlikely to change investor sentiments, adding that any eventual deceleration in non-oil growth should help reduce the import demand that has weighed on the Ghana cedi currency.
“The big picture - despite this print -is that Ghana's medium term outlook remains favourable,” Khan said.
“Ultimately, this will matter a lot more to long-term inflows, with current levels of USD-GHS (Ghana cedi) providing an attractive entry point, although investors may well seek reassurance that further rapid depreciation of the currency is unlikely.”
The Ghana cedi has tumbled to new lows against the dollar in the new year as demand for the greenback by local and foreign investors has outstrip inflows including Central bank supplies.
Societe Generale's Cundapen said the Bank of Ghana must step up its intervention through frequently selling dollars on the interbank market and tightening liquidity so as to help reassure the market of their commitment to stabilizing the currency.
“We believe the Bank is not being proactive enough to raise rates given the inflationary risks on the horizon and the fact that they have allowed the currency to depreciate so much before making recent announcement of concern,” Cundapen said.
Cundapen said Ghana's widening trade gap will continue to weigh on reserves and the currency and this, coupled with foreign investor concern over fiscal discipline leading up to the December elections will add pressure to Ghana's reserves which only cover under 4 months of imports.
Ghana also said on Wednesday that annual producer price inflation index fell to 15.19 percent in December, from a revised 17.94 percent in November as mining and quarrying activities fell due to a drop in gold prices. - Reuters
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