<<Print>>

Policy think tank Danquah Institute (DI) has supported Vice President and NPP flagbearer Dr. Mahamudu Bawumia's acknowledgment of the Bank of Ghana (BoG) for its role in steering the economy through challenging times and decision to provide essential financing to the Government during that pivotal juncture.

In his recent address to the nation, Vice-President, urged Ghanaians to salute and give particular recognition to the Bank of Ghana, which has come under unfair criticism for taking the necessary measures to help pull the economy back from the brink of collapse. According to Bawumia, the central bank provided needed financing to the government at that critical moment.

In a maiden edition of the Institute’s planned monthly media encounter held on Tuesday, February 13, 2024 dubbed: “Analysis of the Ghanaian economy”, DI Head of Research, Dr. Frank Bannor, explained that DI's research confirms that, Dr Bawumia rightly pointed to the fact that between 2013-2016, Ghana’s GDP growth averaged 3.9%.

*GDP Growth*

Comparatively, he said as Dr. Bawumia emphasized, between 2017 and 2020, GDP growth surged to an average of 5.3%.

The Ghanaian economy witnessed substantial growth. From 3.37% in 2016, the economy remarkably grew to 8.13% in 2017," he pointed out.

While acknowledging that the 2017 economic growth was largely influenced by the oil sector (similar to the case in 2011), he mentioned that the non-oil sector growth, stood at 4.9% in 2017, showing a positive growth from 2016.

Dr Bannor added that the robust GDP growth performance was supported by a significant rise in agricultural GDP growth, climbing from an average of 2.9% between 2013 and 2016 to an average of 6% between 2017 and 2022.

Unfortunately, he said the economy, which was estimated to grow at 7.2% in 2020, suffered the devastating effect of the Covid-19 pandemic, causing growth to plummet to 0.51%, the lowest growth rate since 1983!

In explaining further, he said GDP growth rate is calculated by the totality of goods and services, adding that "as such when productivity declined with the advent of Covid 19, trade in goods and services declined and by extension, the GDP growth rate".

*World comparison*

He also indicated that this phenomenon was experienced in several countries. "We find that GDP growth rate in the major economies of the world also fell," he stated.

For instance, he mentioned that Germany’s growth rate fell from 1.1% in 2019 to -3.8% in 2020; that of UK fell from 1.6% in 2019 to -11% in 2020; US GDP growth rate fell from 2.3% to -2.8%; India’s economy declined from 3.9% to -5.8%.

He added that Indonesia’s declined from 5% to -2.1%; Israel’s economy shrank from 3.8% to -1.5%; Italy’s economy fell from 0.5% to -9%; Japan’s economy also decreased from -0.4% in 2019 to 4.2% in 2020; and that of Switzerland, also fell from 1.2% in 2019 to -2.3% in 2020 (see IMF database).

Given the above background and the fact that Ghana could not access the international capital market, he insisted that the only option left was Central Bank financing.