Ghana’s economic growth slowed more than projected in the second quarter as the construction sector contracted.
Gross domestic product in West Africa’s second-biggest economy expanded 5.7% from a year earlier, compared with 6.7% in the three months through March, Government Statistician Samuel Kobina Annim told reporters Wednesday in the capital, Accra. That’s the slowest growth rate in a year. The median estimate of three economists in a Bloomberg survey was for 6.4% expansion. GDP increased 1.4% from the previous quarter.
Key Insights
- The slowdown is partly due to a lack of infrastructure spending by the government. The construction sector contracted by 8.3% from a year earlier. Water supply was down 7.9% and electricity shrank 7.5%. That weighed on industry, which accounts for about a third of GDP. Mining and quarrying expansion, which include oil, slowed to 14% from 21% reported for the first quarter.
- The International Monetary Fund projected in April that Ghana will have the fastest-growing economy in the world this year, at 8.8%. However, the latest results of a Bloomberg News survey shows GDP will expand 6.5% this year.
- A cleanup of the finance sector, which reduced the number of banks by a third to 23 and could lead to 3,000 jobs in the industry being lost, according to the central bank, also affected growth. Finance grew 0.4% in the quarter. However, Governor Ernest Addison said this month the restructuring will ultimately lead to stronger banks, which will translate into faster economic growth and more employment creation and that the economy will continue to grow at about 7% in the medium term. Addison will announce the next interest-rate decision on Friday. [Cerdit: Bloomberg]