Ghana: Q1 2014 GDP

NOMINAL GDP (NGDP)

The level of nominal income was slightly lower than the previous quarter's. This might be a seasonal effect as Q1 NGDP is often lower than Q4 NGDP.

Annual growth, however, rebounded after declining for a couple of quarters. Q1 '14 growth was 24.8%; Q4 '13 was 11.4%.

REAL GDP (RGDP)

Seasonally adjusted RGDP (RGDP-SA) has seen decent increases in the last two quarters.

The quarter-over-quarter (QoQ) RGDP growth rate (seasonally adjusted, annualized) was 10.6%, 11.2% in Q4 2013. The year-over-year rate was 6.7% versus 4.9% in Q4 2013.

GDP Deflator

GDP deflator inflation (QoQ, annualized) rose sharply during the quarter. The year-over-year increase was much lower.

I calculated the deflator index by dividing nominal gdp for a particular quarter by real gdp for the same quarter and then multiplied the result by 100 -- QtNGDP/QtRGDP x 100 = GDP deflator. Ghana Statistical Service derives the overall GDP deflator by taking the average of the sector GDP deflators.

SECTOR GROWTH -- RGDP

Agricultural output grew, quarter over quarter, at a seasonally adjusted annual rate (saar) of 15.4%, down from 20.7% in Q4 2013. Year over year, output grew by 12.7% versus 3.4% in Q4 2013.

Industrial output increased 7.9% (saar), after falling by -5% in Q4 2013. Year over year, industrial output fell by -1.1%, which is a bit better than the fall of -1.6% in Q4 2013.

Services fell by -7.1% (saar). It grew by 8.6% in the fourth quarter. Year over year, it grew 4.6%, a decline from the fourth quarter's 7.2%.

SECTOR GROWTH -- NGDP

Nominal income in the agriculture sector grew at an annual rate of 17.4%, slightly lower than the fourth quarter's rate of 19.8%.

Nominal income in the industry sector grew at an annual rate of 27.3%, an increase from 13.9% in the fourth quarter.

Services nominal income was up by 22.4%, much better than the 2.6% it grew at in Q4 2013.

BOTTOM LINE

Growth in the first quarter was respectable.

It is noteworthy that after falling sharply in the last two quarters of 2013, output in the industry sector grew quarter over quarter, an encouraging sign. The year-over-year growth rate improved marginally but was still negative.

The services sector bears watching. Growth in that sector may be trending downward. Services makes up about 50% of the economy. Declining growth in services will restrain the growth of the economy

The GDP of Ghana (2006-2013), in Graphs

Annual GDP

Both real and nominal GDP (RGDP and NGDP) have grown consistently since 2006. The increase in RGDP is relatively modest, compared to the increase in NGDP.

Growth picked up sharply in 2010, reflecting the impact of crude oil production.

NGDP appears to be maintaining its post-2010 growth rate trend, while the RGDP growth trend may have moderated.

Most of the growth in NGDP is due to implicit GDP deflator (GDP deflator) inflation and not RGDP growth.

The GDP deflator index is calculated as NGDP/RGDP x 100. It is a measure of the prices of all goods and services produced in the economy; it includes the prices of exports, but not import prices. The change in/growth rate of the deflator provides a measure of inflation which is different from CPI inflation. An increase in the deflator may be a positive for an economy -- for instance, when the increase is mainly due to a rise in export prices.

Growth has been declining since peaking in 2011. RGDP growth has declined more rapidly than NGDP growth. NGDP growth has been buoyed by GDP deflator inflation.

Supply Side

It's a services economy. Services is the biggest contributor to GDP. After 2010, industry became the second biggest contributor to GDP, as a result of crude oil production.










Services has consistently been about 50% of the economy since 2006. Agriculture's share declined slowly between 2006 and 2010; it dropped markedly after 2010 as industry grabbed share with help from crude oil production.

Along with RGDP, growth in services and industry appears to have slowed in 2013. Growth in agriculture increased in 2012 and 2013.

Services has the least volatile growth rate.

Ghana is a lower-middle-income country.

Quarterly GDP




GDP has trended upward along a somewhat bumpy path.

NGDP has increased significantly since 2006.










Quarter-over-quarter growth is quite volatile. Shocks to the economy occur frequently.



The growth rate of NGDP has been declining since the end of 2012.




The growth rate of services declined throughout most of 2013.

Growth in services NGDP declined sharply in the last quarter of 2013.

Like services, growth in agricultural production also slowed in 2013.

Agriculture NGDP picked up in the first three quarters of 2013 and declined a bit in the fourth quarter.

In the industry sector, the growth rate turned negative at the end of 2013.















The industry nominal-income growth rate is on a downward trend.

Demand Side

There were slight declines in government consumption and investment (gross capital formation) in 2013, offset by increases in exports and private consumption. The trade deficit declined narrowly.

Consumption expenditure is the biggest slice of the economy.

Private consumption grew in 2013 after falling in 2012.













The growth rate of government consumption has been declining since 2011 and turned negative in 2013.




Growth in investment slowed in 2012 and was negative in 2013.





Exports grew in 2013, but at a lower rate

Imports also grew at a lower rate.