Ghana trims 2014 GDP growth forecast after weak Q2 data

By Matthew Mpoke Bigg ACCRA (Reuters) - Ghana trimmed its economic growth forecast for this year to 6.9 percent after a slowdown in second-quarter growth, the country's statistical service said on Wednesday. The finance ministry had been forecasting full-year growth of 7.1 percent. Ghana's unadjusted GDP growth decelerated to 5.3 percent year-on-year in the second quarter, sharply down from a revised 10.8 percent in the same period last year, government statistician Philomena Nyarko said. The government is holding talks with the International Monetary Fund on a possible financial assistance as it deals with escalating inflation, a currency that has fallen sharply this year and a budget deficit above 10 percent. "What we are starting to see is the impact of the macroeconomic instability on the real economy," economist Sampson Akligoh told Reuters. "These GDP figures are not a surprise." Ghana's economy grew by a revised 7.6 percent in 2013, the statistics service said. Excluding oil, the figure was 7.3 percent. The 2014 growth forecast, while down on 2013, still puts Ghana, which exports gold, oil and cocoa, well above the IMF forecast for sub-Saharan African growth of 5.1 percent. The services sector contributed most to GDP at 50.2 percent in the second quarter while agriculture grew fastest, Nyarko said. Livestock production grew 36.7 percent, the financial and insurance sector grew by 21 percent and forestry and logging were up 13.5 percent year-on-year. But several sectors contracted, including manufacturing, down 11 percent, healthcare, real estate and the hotel and restaurant industry. The hospitality sector has been hurt by an Ebola outbreak in nearby countries that has reduced business travel, hotel owners say. "In the manufacturing sector, the exchange rate losses did affect GDP because people didn’t import much and then the Tema Oil Refinery didn’t produce much oil," Nyarko said, adding that the statistical service forecast is based on data from the first half of the year rather than the budget projections used for the finance ministry targets. The 2014 growth forecast still appears optimistic unless the economy can rebound in the second half, which looks unlikely, said Melissa Verreynne of NKC Independent Economists in South Africa. "The optimistic economic growth forecast translates into an over-optimistic projection for fiscal revenues," she said. Earlier on Wednesday, the statistics office said Ghana's consumer price inflation rose to a fresh four-year high of 16.5 percent in September from 15.9 percent the previous month.