* Ghana producer price inflation rose to 15.3 pct in
* Lower global gold prices affect Ghana production
* Efforts to rein in deficit could squeeze consumers
By Kwasi Kpodo and Matthew Mpoke Bigg
ACCRA, Jan 22 Ghana's economic growth slowed in
the third quarter of 2013 as mining and oil production slumped,
amid signs that a government drive to cut the budget deficit
could be hurting consumers.
The slowdown raised questions about whether the West African
state would meet its target for 7.4 percent growth in 2013 and
reach the 8 percent projected for 2014, analysts said.
Gross domestic product grew just 0.3 percent year-on-year in
the third quarter, compared with 1.6 percent in the third
quarter of 2012 and 6.1 percent in the second quarter of 2013,
the government statistics office said on Wednesday.
Robust GDP growth based on exports of gold, oil and cocoa
and a stable democracy are the bedrock of Ghana's reputation as
one of the most dynamic countries in sub-Saharan Africa.
Growth became even more important last year, as the
government struggled to meet fiscal targets amid a falling
currency, rising inflation and a 2013 budget deficit
provisionally set at 10.2 percent.
Ghana statistics office said a sharp fall in global gold
prices in 2013 has affected production in the sector, which is
the biggest single contributor to government revenue.
"Most of the declines came from the mining and quarrying
sector, especially the drop in gold prices that heavily affected
production," said government statistician Philomena Nyarko.
"We also experienced some down time at the Jubilee field, so
that affected overall growth," Nyarko told a news conference,
referring to maintenance work at the offshore field operated by
Tullow that is Ghana's main producer.
The key sectors making up third-quarter growth were services
at 46.3 percent, agriculture at 30.4 percent and industry, 23.3
Annual producer price inflation rose to 15.3 percent
year-on-year in December from a revised 13 percent in November,
the statistics office announced also on Wednesday.
Analysts also questioned how the slowdown in the mining
sector, which had been expected, could have such a dramatic
effect on overall growth and whether other sectors might also be
"The low real GDP growth figure for Q3 comes as a shock,
even taking into account lower gold and oil production," Melissa
Verreynne, economist at NKC Independent Economists in South
Africa, said in an e-mail. "If it was merely due to lower gold
and oil production, then it is not so worrying. Oil production
should rebound quickly. If, however, non-mining growth was also
poor, then that is more concerning."
Ghana's GDP jumped around 14 percent in 2011, the year after
the country started producing oil, making it one of the hottest
economies in the world and a favourite for emerging-market
investors. Oil stoked optimism about a bonanza in a nation that
had already benefited in the early 2000s from debt forgiveness.
The third-quarter figures, however, raise the possibility
that government efforts to bring down the budget deficit by
cutting utility and fuel subsidies are squeezing consumers in a
way that is starting to hurt growth.
"Maybe we have a bigger problem than we have been thinking
about," said Joe Abbey, executive director of Ghana's Center for
Policy Analysis, adding that the government's full year 2013
projection may also have been overly optimistic.
Statistics service officials played down the figure, arguing
that third quarter growth was often lower because of seasonal
reasons, though they acknowledged that 0.3 percent growth
between July and September was the lowest since 2006.
"One of the factors is low consumer demand, which is as a
result of government's tight monetary squeeze - the monetary
squeeze like the non-payment of contractors," said Asuo Afram,
acting head of economic statistics.