The Institute of Statistics, Social and Economic Research (ISSER) has reviewed the country’s economic performance, saying prospects for the future are good.

However, it cautioned that there were inherent risks and challenges that needed to be addressed.

In a report presented on the State of the Ghanaian Economy in 2009 in Accra yesterday, the institute said, “Although the budget deficit has been reduced considerably, this has implications for job creation and other key expenditures to stimulate the economy.”

Speaking at the launch of the report, the Head of the Economics Unit and Senior Fellow of the institute, Dr Felix Asante, said the year under review recorded the worsening of some key monetary indicators, compared with the preceding year, and mentioned high oil prices, the global financial crisis and rising food prices as some of the reasons which had severe repercussions on the Ghanaian economy.

“There were also issues of excessive government spending in 2008, which resulted in a budget deficit of 15 per cent of Gross Domestic Product (GDP), with its attendant repercussions on the economy in 2009,” he said.

Dr Asante said although inflation had declined consistently, there was the need to address some of the structural problems associated with food production and distribution to ensure the sustainability of the single-digit inflation.

“If the structural problems associated with food production and distribution are not addressed, the attainment of the year-end single-digit inflation target cannot be sustained.

The structural bottlenecks in agriculture, such as irrigation, marketing and transportation, if addressed, will ensure sustained low inflation rates,” he said.

The government has targeted year-end inflation of between six and eight per cent. Currently, inflation for the end of June stands at 9.52 per cent.

Dr Asante said rising crude oil prices on the international market could also affect the sustainability of the single-digit inflation target at the end of the year.

The Senior Research Fellow noted that “the inflation target outlined in the budget can be attained provided oil prices on the international market remain stable and the government is able to stick to its austerity measures”.

He added that the tight fiscal policy and efforts at achieving low inflation had repercussions for employment and other economic activities.

“It is critical at this point for the Central Bank to clearly define an optimal inflation target, a rate that will promote private sector activities and at the same time not hurt jobs,” he added.

Giving the performance of the various sectors of the economy during the past year, Dr Asante noted that the agricultural sector was the star performer in the economy, as it exceeded its target of 5.7 per cent by 0.4 per cent to 6.1 per cent, 0.1 per cent higher than the target for 2008.

“This was as a result of a 41.4 per cent increase in the crops and livestock sub-sector from 5.8 per cent in 2008 to 8.2 per cent in 2009,” he stated, adding that the cocoa sub-sector also increased by 24 per cent from five per cent to 6.2 per cent.

The services sector was the second fastest in terms of growth rate, although its rate represented a 37 per cent decline over the rate recorded in 2008.

The industrial sector was the slowest growth sector for 2009, recording -4.3 per cent.

“To enhance the structural transformation that an economy like Ghana so desires, there is the need for intensive investment in the productive sectors (the industry and the services sectors) of the economy which will translate their growth rates into greater shares of national output,” he stated.

Dr Asante said the government should focus on improving domestic staples and also intervene and address some of the challenges confronting the export of non-traditional exports.

Giving an outlook of the various sectors for 2010 and beyond, the research fellow said the cocoa sector would continue to maintain its lead role in the agricultural sector.

On the Industrial sector, he said the projected growth of the sector was expected to be driven by construction activities related to the railway, road, oil and gas sectors.

The services sector, according to him, still remained the only primary linkage for the primary sectors of the economy.

A discussant at the programme, Dr Kwadwo Tutu, a former acting Chief of the Environment and Sustainable Section of the United Nations Economic Commission for Africa (UNECA), stressed the need to manage the utilities to ensure efficiency and value for money.

On the minerals sector, he questioned why there had not been any attempt to establish a gold refinery in the country to expand the base of the economy all these years that the country had been mining its natural resources.

He said for the country to make a headway, people must be disciplined, law and order must work, work ethics must be enforced and timeliness ensured in all endeavours.

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