91809 GHANA ECONOMIC UPDATE October 2014 AFTP3 Africa Region The World Bank Contents Foreword ....................................................................................................................................................... 1 Summary ....................................................................................................................................................... 2 Part I: Recent Economic Developments........................................................................................................ 3 1. Balance of Payments ............................................................................................................................. 3 2. Fiscal Developments.............................................................................................................................. 5 3. Money and Prices .................................................................................................................................. 8 4. Economic Growth .................................................................................................................................. 9 5. Outlook .................................................................................................................................................. 9 Part II: Trends in Poverty, Inequality & Labor ............................................................................................ 10 6. Introduction......................................................................................................................................... 10 7. Poverty and Inequality in Ghana ......................................................................................................... 11 8. Employment trends in Ghana.............................................................................................................. 14 Foreword T his report is the most recent in a series aimed at monitoring economic developments in Ghana and has two sections. The first section summarizes the recent macroeconomic developments in the country (written by Felix Oppong) while the second section presents the main findings on poverty and employment published recently by the Ghana Statistical Service (summarized by Dilek Aykut and Gregory Smith). It received inputs from Theo Braimah Awanzam. The entire report was reviewed by Santiago Herrera. Comments on the content of this report are welcome. Mark Thomas Sector Manager Poverty Reduction and Economic Management 3 Africa Region Ghana Economic Update October 2014 1 Summary Ghana’s overall macroeconomic conditions have deteriorated further in 2014 with large twin-deficits lingering, fueling government debt and inflation, a sharp depreciation of its currency, and a weaker pace of economic growth. The fiscal deficit remains the biggest source of vulnerability in the Ghanaian economy. Preliminary figures show the fiscal deficit was 9.2% of GDP in the first half of 2014, driven by the high wage bill and rising interest costs. The wage bill grew 25.7% (y-o-y) during the first half of 2014 despite promised measures to contain it, while interest payments reached 5% of GDP. Total domestic revenue collections were dragged down by a contraction in non-tax revenue while tax revenue only increased slightly to 15.6 % of GDP. With large expenditures planned for the second half of the year, the deficit is projected to be around 10% of GDP, above the government’s 8.8% target for 2014. The government continued to add to its stock of public debt to finance the fiscal deficit. Public debt reached 58% of GDP in August 2014, excluding the stock of arrears and SOE’s debt. If the public debt figure is modified to include these two factors and the Eurobond issued in mid-September, the stock of public debt would exceed 70% of GDP. Domestic financing of the fiscal deficit has been provided via the Bank of Ghana’s (BoG) expansion of net credit to the government and SOEs. In fact, the BoG financed the entire fiscal deficit during the first quarter of 2014. The monetary expansion was sterilized through open market operations and monetary tightening (300 bps in 2014). Interest rates on 91-day Treasury bills reached 25% in August. Headline inflation was 15.9% in August 2014 up from 13.5% in December 2013 due to adjustments in prices of petroleum and utilities, plus rising prices of imported products following depreciation of the Ghanaian Cedi since January 2013. As a result, non- food inflation reached 24% and producer price inflation 48.3%; while food inflation remained subdued at 5.1%. Ghana’s external imbalance persisted in 2014. While the current account deficit remained around 10% of GDP (first half of 2014) financing was particularly challenging. Despite the robust FDI inflows, the financial account significantly weakened following net outflows of portfolio investment and short-term capital. As a result, the Ghanaian cedi depreciated against the US dollar by 35% on the official interbank market, but by 43% on the forex bureau market by July. Net international reserves had declined to $601 million in June 2014, covering only 12 days of imports of goods and services. International reserves will get a boost from the Ghana Cocoa Board (Cocobod) loan of US$1.7billion and recently issued $1 billion Eurobond. Ghana issued its third 10-year Eurobond in mid-September with a yield of 8.25%. While the yield was slightly lower than 8.5% that Ghana paid last August, it was significantly higher than the 5.375% Ivory Coast paid for the 10-year $500 million Eurobond issued in July 2014. Spreads on Ghana’s existing sovereign bonds have narrowed slightly in September after the Ghanaian government officially requested assistance from the IMF. Macroeconomic challenges continue to weigh on economic growth. In first quarter, growth was lower at 6.7% compared to 9% in the first quarter of 2013. GDP growth already slowed down to 7.1% in 2013 and is expected to remain subdued around 6.0 % for the full year 2014. Slower growth and higher inflation could easily erase recent gains in poverty reduction. Official data shows the poverty rate decreased to 24% in 2013 from 31% in 2006, making it very likely that Ghana meets the goal of halving poverty rates by 2015. However, there is a great disparity in poverty levels across the country. For instance, in rural areas, 38% of the population is poor, while in the urban areas only 11%. Geographically, the disparity is even larger with 55% of the Rural Savannah population living below the poverty line, compared to 3.5% of the population in Greater Accra Metropolitan area. Inequality, as measured by the Gini coefficient, increased from 41.9 in 2006 to 42.3 in 2013. Poverty reduction in Ghana is linked to developments in the labor market, where the participation rates increased substantially and the share of agriculture employment (with the lowest wages in the economy) decreased. The reported unemployment rate at 4.4% is extremely low, but the figure has to be interpreted with great caution due to the substantial size of the informal sector. In addition, underemployment reached 33 percent. A careful analysis of the determinants of poverty and inequality, and their interaction with labor market variables is just beginning, as the 2013 surveys were just released. However, these preliminary findings highlight how critical are Ghana’s policy decisions over the next 12 months to pursue more inclusive and stable growth. Urgent efforts are needed to build a more predictable policy environment that facilitates diversification from capital intensive activities in extractive industries towards more labor and land intensive activities in the agriculture and services sectors. Ghana Economic Update October 2014 2 PART I: RECENT ECONOMIC DEVELOPMENTS The merchandise trade deficit narrowed significantly as imports fell faster than exports. 1. Balance of Payments Compared to the first semester of last year, Ghana’s external imbalance continued to merchandise exports fell by $480 million to $6.9 deteriorate during the first half of 2014 with the billion in the first half of the year (figure 1.a), due lingering large current account deficit, reversal of mostly to the fall in gold; the exported value short-term capital flows, declining international declined by $559 million (20 percent, y-o-y) to reserves and sharp currency depreciation. US$2.1 billion as both the price (15 percent) and Ghana’s current account deficit remained around volume (6 percent) fell. Cocoa export revenue 11 percent of GDP during the first half of the year increased slightly by $131 million to US$1.6 (Table 1).The current account deficit narrowed by billion, as a result of 11 percent increase in $233 million to $1.9 billion (10.9 percent of GDP) volume offsetting the 2.5 percent fall in price. Oil in the first semester of 2014, compared to $2.2 exports remained almost the same at $2 billion as billion (9.9 percent of GDP) in the first half of the slight price increase compensated for the 2013. The slight improvement in the current decline in volume. account balance was the net effect of the $1.1 billion narrowing of the trade deficit over $0.8 Ghana’s imports contracted by $1.6 billion from billion widening in the service and income deficit. $8.8 billion (40 percent of GDP) to $7.2 billion in the first semester (figure 1.b). The sharp Table 1: Balance of Payments, 2012–14 as a percent of depreciation of the cedi and the slowing economy half year Gross Domestic Product weighed down on import demand. The non-oil 2012h1 2012h2 2013h1 2013h2 2014h1* 2014h2f sector accounted for the larger portion of decline, Merchandise Exports (f.o.b.) 40.6 26.2 34.0 24.5 39.0 40.2 with $1.3 billion. The adjustment was widespread o/w Oil exports 7.3 7.0 9.2 7.3 11.4 11.9 non oil 33.3 19.1 24.8 17.2 27.7 28.4 among the types of goods but the largest drop Merchandise Imports (f.o.b.) -47.8 -38.7 -40.0 -34.2 -40.4 -44.7 was in capital goods with 33 percent, followed by Non-Oil -38.2 -31.9 -31.5 -27.7 -31.1 -35.5 the consumptions goods with 20 percent (figure Oil -9.6 -6.7 -8.6 -6.5 -9.3 -9.1 1.b). Merchandise Trade Balance -7.2 -12.5 -6.1 -9.7 -1.4 -4.4 Services and income net -14.6 -1.7 -8.4 -7.6 -14.9 -8.6 Services ( net) -6.2 0.8 -5.9 -4.4 -8.6 -4.2 During the first half of 2014, non-residents Income ( Net) -8.4 -2.5 -2.4 -3.2 -6.3 -4.4 repatriated $1.1 billion of income generated in Transfers 8.2 3.8 4.5 3.7 5.4 5.1 Ghana, almost doubling the $0.6billion Current Account (incl. official transfers) -13.6 -10.4 -9.9 -13.7 -10.9 -7.9 repatriated during the first half of 2013. With the Capital and Financial Account ( incl. E/O) 3.0 13.7 6.8 12.5 2.4 18.3 Capital Account 0.7 0.6 0.1 0.7 0.8 0.5 slight increase in net services imports, the net Financial Account 2.2 13.1 6.7 11.8 1.6 17.8 service and income deficit was an estimated 14.9 NOC (M/L) 2.3 2.4 2.0 1.7 2.9 3.1 percent of GDP in the first half of 2014 compared Private Capital 7.8 6.7 6.1 6.2 8.3 3.2 Foreign Direct Investment ( Net) 9.1 7.0 6.7 6.9 10.2 3.5 with 8.4 of GDP during the same period in 2013. Portfolio Investment: net 0.5 4.5 0.1 2.4 -1.1 4.7 Short-term Capital -8.6 -0.4 -0.1 3.2 -6.8 8.9 Financing of the current account deficit was Government Oil Investment -0.1 -0.1 -0.8 -0.8 -0.5 -1.9 challenging amid the significant reversal in short Errors and Omission ( e/o) 0.3 0.0 -0.5 -0.9 -1.3 -0.3 term capital inflows (including trade credit) and OVERALL BALANCE -10.6 3.3 -3.1 -1.2 -8.5 10.4 portfolio investment. Despite the robust FDI Source: Bank of Ghana and World Bank staff calculations inflows mainly to the oil sector during the first Ghana Economic Update October 2014 3 half, portfolio investment (debt and equities) Figure 2: Ghanaian Cedi against US$ marked net outflows and both private and official (Official interbank) amortization increased. As a result, the capital and financial account, including net errors and omissions, totaled only $426 million (2.4 percent of GDP). As a result of the external imbalance, the Cedi depreciated sharply. Actual depreciation figures differ, as Ghana has, in practice, a multiple exchange rate regime; official interbank and forex bureau, with the latter being more prevalent. The Source: Bank of Ghana and World Bank staff calculations cedi depreciated against the US dollar by 35 percent in the official interbank market, but by 43 percent on the forex bureau market by July 2014 The capital and financial account (including errors (figure 2). and omissions) is projected to rebalance in the second half of the year, thanks to the effect of the The cumulative depreciation of official interbank Eurobond issued in mid-September (US$ 1 billion), rate over the last year was bigger than 30 percent Cocobod loan flows (US$1.7 billion), and slower depreciation that Ghana experienced after the short term capital outflow in response to the global financial crisis in 2009. Ghana’s net expectation of a positive outcome of the international reserves stood at US$601million (12 negotiation with the IMF. If the volatility persists days of imports of goods and services) as of end or accentuates, and external financing does not June, 2014. materialize, then the reduction in the current For 2014, the current account deficit is projected account deficit required to close the financing gap to narrow slightly to 8.7 percent of GDP, on would be larger, and force a stronger adjustment account of a lower trade deficit and decreased net through relative prices of traded and non-traded services and income outflow during the second goods. half of 2014. Figure 1:Merchandise exports and imports a. Merchandise Exports (fob), $ billion b. Merchandise Imports (cif), $ billion 3.00 6.00 2013H1 2013H2 2014H1 2.50 2013H1 2013H2 2014H1 5.00 2.00 4.00 1.50 3.00 1.00 2.00 0.50 1.00 - - Cocoa beans & Gold Oil exports Other exports Capital Goods Intermediate Consumption Other Goods products Goods Goods Source: MoF and Staff calculations Ghana Economic Update October 2014 4 2. Fiscal Developments arrears. The wage to tax ratio was planned to reach 48.5 percent by the end of 2014 but The fiscal deficit remains a major source of reached 56.5 percent in June 2014, diminishing vulnerability for the Ghanaian economy. the likelihood of reaching the planned target by Preliminary figures show the fiscal deficit at 9.2 year end (figure 3). percent of GDP in the first half of 2014, higher than the 8.8 percent in the first half of 2013, due Table 2: Central Government budgetary operations, to the shortfall in revenue collection, and rising 2012-14 (percent of GDP) wage bill and interest costs (table 2). 2012h1 2012h2 2013h1 2013h2 2014h1* Total revenue was dragged down by non-tax Total revenue and grants 22.2 16.3 19.5 15.4 18.1 o/w Oil Revenue 1.3 1.3 2.0 1.5 2.3 revenue, which fell to 18.1 percent of GDP by Direct taxes 8.1 6.8 7.4 6.2 7.5 June 2014, compared to 19.5 percent of GDP Indirect taxes 6.5 4.9 5.6 4.8 5.6 during the same period in 2013. During the Trade taxes 3.1 2.4 2.4 2.6 2.4 Nontax and other revenue 1.6 1.6 2.8 1.4 1.8 period, the government failed to implement Grants 2.8 0.6 1.2 0.5 0.7 planned revenue enhancing measures such as Total expenditure 25.1 23.3 22.2 28.7 22.7 Wages and salaries 9.8 8.3 8.8 8.8 8.8 the change of petroleum excise taxes from Goods and services 0.8 2.5 0.9 2.1 0.8 specific to ad valorem and taxes on fee-based Subsidies to utilities 1.3 0.9 0.1 2.2 0.1 financial services. Social Transfers 3.8 3.0 2.4 4.4 2.2 Reserves fund 1.8 1.1 0.8 0.9 0.0 Tax revenue remained at 15.6 percent of GDP, Debt interest costs 3.2 3.3 5.0 4.4 6.2 Domestic fin. capital expenditures 0.8 1.8 0.7 2.9 0.7 similar to the 15.5 percent recorded in first half of Foreign fin. capital expenditures 3.6 2.4 3.4 3.0 3.9 2013 but stood below the half year budgeted Arrears clearance, VAT refunds -7.6 -3.3 -3.6 -1.6 -3.9 target of 16.6 percent. The shortfall vis-à-vis the Primary Balance -7.3 -6.9 -1.3 -10.5 -2.3 mid-year budget was mainly as a result of lower Overall balance (cash basis) after -12.4 -11.1 -8.8 -11.2 -9.2 Discrepancy payments of corporate taxes and royalties Foreign net borrowing 1.6 2.6 1.8 4.8 2.1 payments by mining companies, a general slowdown of business activities, and the non- Domestic net borrowing 10.8 8.5 7.0 6.4 7.1 payment of withholding taxes by some Source: Ministry of Finance and Staff calculations government agencies such as the Ghana Education Trust Fund and some District Many factors account for the persistent rise of the Assemblies. wage bill in Ghana. These include the inability of While revenue declined, total expenditure government to implement the net freeze in increased slightly to 22.7 percent of GDP, from employment and moratorium on public sector 22.2 percent in June 2013. The increase was wage increase proposed in the 2014 national fueled by higher than budgeted wage bill, interest budget, persisting wage creeps within the public payment and foreign financed capital service wage administration, payment for expenditure. backdated promotions and salary arrears, and higher than budgeted cost of migration onto the The wage bill grew 25.7 percent (y-o-y) during the single spine payroll. first half of 2014, despite the government’s measures to contain it. The wage bill amounted to 8.8 percent of GDP in the half year of 2014. In addition, the government spent 0.7 percent of GDP (Ghs 379 million) on clearance of wage Ghana Economic Update October 2014 5 Figure 3: Wage to Tax Revenue (Percent) Figure 4: Interest Payments as a percent of GDP and revenue (2004-2014h) Wage/Tax Revenue (%) percent percent As of June 45 7 65 61.2 2014 40 60 Interest payments/Tax revenue (LHS) 6 56.5 35 55 Interest Payments/GDP (RHS) 5 30 50 48.5 25 4 45 Government target for 20 3 40 2014 15 35 2 10 30 1 5 25 0 0 2004 2006 2008 2010 2012 2014h1 Source: MoF and Staff calculations Source: MoF and Staff calculations As a short term measure to curtail the wage Capital expenditure rose slightly to 4.6 percent of menace, the government agreed with the labor GDP in 2014, up from 4.2 percent in June 2013. unions to pay a cost of living allowance (Cola) of The increase came in form of foreign capital 10 percent, effective May 2014 instead of a expenditure while domestic financing remained general salary increase. The Cola freezes the cost small (table 2). of pension in 2014 for employees on government The large fiscal deficit continued to be financed payroll. Other measures being pursued include mostly with domestic credit during the first half of special audit of payroll, electronic salary payment the year. In fact, Bank of Ghana (BoG) financed vouchers and an upgrade of the payroll the entire budget deficit during the first quarter management system. Government is yet to record and 70 percent of the total deficit during the first gains from these measures. half of the year. The rest was financed by foreign Interest payments constitute the other large and flows (22 percent of the total) and by domestic increasing expenditure item in the budget. (figure banking and non-bank institutions. 4). The interest expenditure accounted for 40 In order to finance the budget deficit, the percent of the revenue for the first half of the Government kept on adding on to its stock of year while it reached 6.2 percent of GDP public debt, which reached 58 percent of GDP by compared to 5.0 percent in June 2013. The the end of August 2014, excluding the stock of increase has been driven by rising domestic arrears estimated at 4.8 percent of GDP and SOEs borrowing at high interest rates. Domestic debt of 6.3 percent. By June 2014, domestic interest payments accounted for 5.3 percent of public debt reached Ghs 28 billion (25.3 percent GDP, up from 4.4 percent last year, while external of GDP). interest payment inched up to 0.9 percent of GDP from 0.7 percent in 2013. Most of domestic debt issuance over the last twelve months has been of short-term maturity— maturity with less than one year. The share of short-term instruments in total domestic public debt increased to 36.2 percent in July 2014 from 27.5 percent in July 2013 while the medium term Ghana Economic Update October 2014 6 instruments still account for the largest share bank held 24.1 percent of the total domestic debt (table 3). issued by July 2014. (Table 3) The domestic financing of the deficit is possible Figure 5: 91-day and 182 day Treasury Bills (2014) due to the Bank of Ghana’s (BoG) accommodative credit policy as it has expanded net credit to the government and to public enterprises. Table 3: Domestic debt stock composition by maturity, (percent of total) Jun-13 Jul-13 Dec-13 Jun-14 Jul-14 Short-Term Instruments 28.1 27.5 33.0 35.5 36.2 Medium-Term Instruments 58.0 50.1 47.2 45.6 45.0 Long-Term Instruments 13.9 22.4 19.8 18.9 18.8 Source: Bank of Ghana Table 4: Domestic debt composition by holders, Source: Bank of Ghana (Percent of total) Jun-13 Jul-13 Dec-13 Jun-14 Jul-14 Domestic treasury issues increased to Ghs25.5 Banking sector 45.8 53.2 52.4 51.8 52.2 billion in September2014 from Ghs19.3billion Bank of Ghana 17.6 25.6 23.6 25.1 24.1 during the same period last year. Government Deposit Money Banks 28.2 27.6 28.8 26.7 28.2 increased its issues this year in accordance with Nonbank sector 26.6 22.9 26.0 28.3 28.0 rising fiscal commitments. (Figure 6) SSNIT 3.7 3.3 2.7 2.4 2.6 Insurance Co.s 0.2 0.2 0.2 0.2 0.2 Figure 6: Government of Ghana Domestic Treasury NPRA 0.9 0.3 0.3 0.0 0.0 Issues, 2012-14 (Million Ghana Cedis per week) Others Holders 21.8 19.1 22.9 25.7 25.2 Rural Banks 1.9 1.7 1.7 1.6 1.6 Firms & Institutions 13.5 11.8 13.5 15.4 15.1 Individuals 6.4 5.6 7.7 8.7 8.5 Foreign sector(Non-Residents) 27.6 23.9 21.6 19.9 19.8 Source: Bank of Ghana Nevertheless, majority of the debt stock as of July 2014 is still with medium-term maturity together with the Eurobond; 91-day treasury bills (22.8 percent), followed by 3-Year Fixed Treasury note (17.3 percent), Long Term Government Stocks Source: Bank of Ghana (17.2 percent) and the rest (42.7 percent) spread on other instruments. On the international front, Ghana issued its third Eurobond in September 2014 valued at $1 billion The banking sector held 52.2 percent of the maturing in 2024. The yield was 8.25 percent government domestic debt of which the central slightly lower than 8.5 percent that Ghana paid last August and Zambia paid in April 2014 for a Ghana Economic Update October 2014 7 similar bond mainly due to the fall in US 10-year inflation and arrest the depreciation of cedi. BoG Treasury bond yield. That said the yield was much also increased the reserve requirement of deposit higher than the 5.375 percent for the 10-year money banks from 9 percent in the beginning of Eurobond for $500 million that Ivory Coast issued the year to 11 percent to tighten liquidity in the in July even after it missed a coupon payment in economy. December 2010. For the half-year, domestic credit from deposit The spread on Ghana’s Eurobond maturing in money banks to the government increased by 2017 has narrowed since the announcement of 29.2percent (y-o-y) to Ghs 5.8 billion while credit possible IMF program in early September. to private sector increased by 45.8 percent (y-o-y) Nevertheless Ghana still has to pay a premium to Ghs19.6billion. A non-trivial portion of the over the sovereign bonds of Kenya, Zambia and credit of commercial banks to the private sector Tanzania in the order of 100-150 basis points originates in the financing of oil imports of the (figure 7). bulk oil distributors that have not been paid by the government. Figure 7: Difference between bond-spreads of Ghana, Kenya, Tanzania and Zambia Total liquidity in the banking sector (M2+) increased by almost 32 percent to Ghs30.7 billion by June 2014. Figure 8: Consumer Price Index Inflation (January 2013 to August 2014) Source: J.P. Morgan 3. Money and Prices The Bank of Ghana continued to accumulate domestic assets while the net foreign assets decreased in first half of the year. Domestic assets increased by Ghs3.5billion (y-o-y), as a result of a Source: Ghana Statistical Service Ghs4.0billion claims on the government and compensated by a Ghs530 million contraction Inflation is increasing, and there is a wide from the rest of the economy. On the other hand, divergence between consumer and producer the net foreign assets declined by Ghs793million prices indices. Consumer price inflation reached (a 15.8 percent fall from Ghs5.0billion in June, 15.9 percent in August, up from 13.5 percent in 2013 to Ghs4.2billion in June 2014). December 2013 (figure 8). Inflation was driven by the non-food inflation (24 percent) while food BoG sterilized its monetary expansion by inflation remained subdued at 5.1 percent. increasing open market operations, and raising its Adjustments in prices of petroleum and utilities, policy rate by 200 bps in February 2014 and and rising prices of imported products due to the another 100 bps in July to 19 percent to control depreciation of the Ghanaian cedi pushed the Ghana Economic Update October 2014 8 non-food inflation up to 24 percent in August. Figure 9: First quarter growth and sector contribution (Figure 8) to growth Similarly, producer price inflation also followed a rising trend to reach 48.3 percent in August 2014, up from 4.7 percent a year ago (figure 9). Figure 8: Producer Price Index (Percent) Source: Ghana Statistical Service and World Bank staff calculations 5. Outlook Source: Ghana Statistical Service Growth in 2014 is expected to remain modest at around 6 percent. Despite the downside risks in 4. Economic Growth the short-term, Ghana’s growth prospects are Amid the macroeconomic challenges, economic positive in the long-term, at around 4-6 percent growth slowed down in the first quarter in 2014 per capita. But the economy has to be stabilized as the manufacturing sector contracted sharply. for the positive projections to materialize. GDP growth rate in the first quarter was 6.7 percent (y-o-y), though very likely it will be Inflationary pressure will continue mounting, due revised downward by the GSS. The slowdown was to adjustments in petroleum product prices and mainly driven by the 21.2 percent contraction in utilities. As a result, inflation is not likely to return the manufacturing sector which reversed the to the target band of 13±2 percent before the end growth in the entire industry sector and other of the year. The producer price inflation is sectors. projected to reach 50 percent by the end of the year due in parts to the impact of the exchange The contribution of the service sector reduced to rate depreciation on the manufacturing sector 4.9 percent in Q1 2014 from 5.1 percent, while (which has a significant weight in the producer industry growth collapsed to 3.0 percent , from price basket). 0.7 percent in 2013. However, the production of oil increased by 16.3 percent in real terms leading Other inherent risks in the economy include the to higher contribution of 2.3 percent to growth in rising wage bill, high and rising interest rates, and Q1, 2014. the loss of net international reserves. Some medium term risks include the persisting energy The contribution of the agriculture sector to sector constraints, rising public debt and debt growth increased 2.4 percent in Q1 2014 service ratios, cyclical electoral over expenditure, influenced by higher real production in all sub- the impact of volatility of international sectors except the livestock sector. (Figure 15) commodity prices on the external sector. Ghana Economic Update October 2014 9 PART II: TRENDS IN POVERTY, INEQUALITY & LABOR 6. Introduction Feeding Program have been implemented with One of the major challenges facing many the aim of alleviating poverty among the developing countries, including Ghana, has been vulnerable population. the need for a more comprehensive, reliable and up-to-date statistics and indicators to monitor and Main findings: evaluate the impact of development policies and • About a quarter of Ghanaians are poor programs on the living conditions of their citizens. whilst those considered as extreme poor are a The Ghana Living Standards Survey was an little less than a tenth of the population. Poverty initiative aimed at addressing this need. in Ghana remains a rural phenomenon as more than a quarter of people living in the rural The Ghana Living Standards Survey (GLSS) has savannah are extremely poor. emerged as one of the important tools in the welfare monitoring system as it collects • Farmers are not just the poorest in information from a nationally representative Ghana, but they contribute the most to Ghana’s sample of households for the measurement of the poverty levels. On the other hand, poverty living conditions and well-being of the population. incidence is the lowest among public employees. GLSS was conducted in 1987, 1988, 1991/92, 1998/99, 2005/06 and in 2012/13. Three new • Lack of education is still a hindrance to modules have been introduced in last round: poverty reduction. Aside the fact that households Labor Force Module focusing on employment and with uneducated household heads are the time use, a module on Household Access to poorest in Ghana, they contribute the most to Financial Services and a module on Governance, Ghana poverty incidence. Peace and Security. • Income inequality—measured by the Gini This chapter summarizes the results of two coefficient—has increased slightly from 41.9 in reports: Poverty Profile in Ghana and Ghana 2005/06 to 42.3 in 2012/13. The increase, even if Labor Force Report, both were published by it is small, implies that a lot more Ghanaians did Ghana Statistical Service (GSS) in August 2014. not benefit from the robust growth rates since These reports are based on the sixth round of the 2005. GLSS (GLSS 6) conducted by GSS over the period • The unemployment rate is stated as 4 from 18th October 2012 to 17th October 2013. percent for 2012/13. While this rate is quite low Additional reports based on the data are being in any international standards, the numbers prepared by the World Bank and will be available should be evaluated against the size of informal in coming months. sector as well under-employment in Ghana. On average 33 percent of employed people’s time is The reports by the GSS focus on GLSS6 data. deemed to be inactive; i.e. there is While the reports do not seek to compare the underemployment. results with the previous reports due to recent methodological changes, they provide comparable estimates for the 2005/06 survey, when possible, to reflect upon the changes. In addition, several social intervention programs including the Livelihood Empowerment against Poverty (LEAP), Capitation Grant and School Ghana Economic Update October 2014 10 7. Poverty and Inequality in Ghana requirements of household members. Individuals whose total expenditure falls below this line are The Poverty Profile in Ghana report examines the considered to be in extreme poverty. The poverty levels and patterns in Ghana among absolute poverty line is Ghs 1,314.00 per adult per geographical and administrative regions as well as year. This incorporates both essential food and among the various socioeconomic groups to non-food consumption. better understand the improvements in poverty levels in Ghana as well as remaining According to the GLSS6 results, 24.2 percent of vulnerabilities. The analysis is based mostly on Ghanaians were poor, whilst those considered as two indicators: the poverty incidence (P0) which extreme poor were 8.4 percent of the measures the proportion of the population that is population. About 5.9 million people in Ghana poor, and the poverty gap index (P1) which lived on less than Ghs 1,314.00 in 2013. More measures intensity of poverty in a country. The than two million Ghanaians are extremely poor gap index is the average ratio of the gap to which and cannot afford to feed themselves in order to individuals fall below the poverty line (for non- consume 2,900 calories per adult equivalent of poor the gap is counted as zero) as the proportion food per day, even if they were to spend all their of the poverty line. The measure does not reflect income on food (table 2.1, figure 2.1). changes in inequality among the poor, but it adds up the extent to which individuals on average fall This represents a significant reduction in poverty below the poverty line, and expresses it as a rates since 2006. Since the consumption basket percentage of the poverty line. was recalculated in GLSS 6, some adjustments are required to make the results of the previous The report findings are based on the revised survey comparable. After such adjustments, the poverty lines for Ghana. As the consumption comparison shows that Ghana experienced a 7.7 patterns changed, GSS was deemed necessary to percentage point reduction in overall poverty and update the composition of minimum consumption 8.1 percentage point in extreme poverty since basket to attain an acceptable living standard. 2005/06. Poverty rates in both urban and rural areas were reduced albeit from smaller levels in Based on the revised consumption basket, the urban areas. The significant reduction strengthens extreme poverty line for Ghana is Ghs 792.05 per Ghana’s position to achieve the first Millennium adult per year. This is the cost of the consumption Development Goal, which seeks to halve the basket needed to meet the nutritional poverty rates by 2015 from the rate in 1991/92 Table 2.1: Summary of poverty incidences in Ghana (2005/06 and 2012/13) Contribution Contribution Poverty Contribution Poverty Contribution Poverty gap to total Poverty gap to total Locality incidence to total incidence to total (P1) poverty gap (P1) poverty gap (P0) poverty (C0) (P0) poverty (C0) (C1) (C1) 2012/13 2005/06 Accra (GAMA) 3.5 2.2 0.9 1.8 12 4.4 3.4 3.7 Urban Coastal 9.9 2.1 2.2 1.5 6.4 1.2 1.3 0.7 Urban Forest 9.9 9 2.1 5.8 8.7 4 2.2 3 Urban Savannah 26.4 8.6 6.6 6.8 30.1 5.1 10.7 5.3 Rural Coastal 30.1 7.1 8.7 6.4 27.2 9.3 6.7 6.7 Rural Forest 27.9 30.1 7.9 26.7 33.1 29.1 8.4 21.4 Rural Savannah 55 40.8 22 51.1 64.2 46.9 28 59.4 Urban 10.6 22 2.5 15.9 12.4 39 3.7 33.3 Rural 37.9 78 13.1 84.1 43.7 136.9 15.4 140.3 All Ghana 24.2 100 7.8 100 31.9 100 11 100 Source: Poverty Profile in Ghana report August 2014) Ghana Economic Update October 2014 11 Figure 2.1: Urban and Rural Poverty incidences in Ghana (2005/06 and 2012/13) Poverty incidence Extreme poverty incidence (Poverty line= Ghs 1,314) (Poverty line= Ghs 792.05) All Ghana All Ghana Rural Rural 2005/06 2005/06 Urban Urban 2012/13 2012/13 0 20 40 60 0 10 20 30 Source: Poverty Profile in Ghana report (August2014) those living in Rural Savannah localities (55 (51.7percent) at a minimum basket (poverty line) percent). The report indicates that in 2012/13 of Ghs 3,708 in 1991/92. contribution to poverty incidence in Rural Savannah localities is higher than Rural Coastal The poverty decline in Ghana has not been and Rural Forest localities combined. Notably, evenly distributed geographically, however. The Rural Savannah contributes 41 per cent to the poverty rates declined significantly in Accra, urban overall poverty in Ghana. and rural Savannah and rural coastal, while it increased in urban and rural forest and urban Similarly, although extreme poverty is relatively coastal (figure 2.2). low in Ghana with less than ten percent of the population, it is quite concentrated in Rural Poverty continues to be a disproportionately Savannah areas, with more than a quarter of rural phenomenon. According to 2012/13 survey, people living in the rural savannah areas of Ghana 50 percent of the Ghanaians living in the rural considered to be extremely poor (figure 2.1). communities contributed as much as 78 percent to the national poverty incidence levels, whilst the Ghana’s rural areas are also where the poverty remaining half living in urban communities gap—average fall below the poverty line—is the contribute just 22 percent. Among rural localities, largest (table 2.1). While on average the poor the poverty incidence is much higher among population in Ghana lived 32 percent below the poverty line of GH¢1,314, the rural population Figure 2.2: Regional poverty incidences in Ghana (2005/06 and 2012/13) Urban Savannah Rural Savannah Urban Forest Rural Forest Urban Coastal 2005/06 2005/06 2012/13 2012/13 Rural Coastal Accra (GAMA) 0 10 20 30 40 0 20 40 60 80 Source: Poverty Profile in Ghana report (August 2014) Ghana Economic Update October 2014 12 Figure 2.3: Poverty incidences by employement and education (2005/06 and 2012/13) Poverty incidence by employment Poverty incidence by education level of (Poverty line= Ghs 1,314) the head of household Retired Tertiary Voc/Tech/Teac Public Employee 2005/06 2005/06 her Private Employee 2012/2013 2012/13 SSS/Secondary Self-employed (non-agric) MSLC Other Inactive BECE Unemployed None Self-employed (agric) 0 20 40 60 0 20 40 60 Source: Poverty Profile in Ghana report (August 2014) contributes more than 80 percent of the poverty The types of economic activity and education gap, which needs to be closed to reduce poverty. level of the head of the household seem to matter considerably. The poverty incidence Accra recorded the lowest poverty incidence among households engaged in self-employment in among all the geographical areas. This low rate of agricultural sector is highest whilst households 3.5 percent may be due to the fact that Accra, whose head are paid employees, self-employed in being the capital of Ghana witnessed the highest non-agricultural sector or retired are less likely to rural-urban migration, with many people who be poor (figure 2.3). come to seek for job been engaged as self- employed within the services sector where most Despite the slight improvement since 2005/06, of the youth are engaged in petty trading. This farmers are still the poorest in Ghana. The GSS sector, according to the numerous reports on the report shows how households in the Savannah performance of the economy published between are poorer compared to other areas while 2007 and 2013 by the Ghana Statistical Service agriculture is their main economic activity. shows that the sector has been the main driver of Ghana’s GDP. A large proportion of individuals Among employed population, public employees engaging in these economic activities lived above are the group with the least incidence of poverty. the poverty line. The GSS report also shows that poverty incidence among households headed by a person with Figure 2.4: Income equality by region in Ghana (2005/06 and 2012/13) Source: Poverty Profile in Ghana report (August 2014) Ghana Economic Update October 2014 13 secondary education or higher is lower than the instrumental to achieving economic and social national average (figure 2.3). The contribution to development and as a principal source of national poverty incidence by households headed household income. As discussed in the previous by an uneducated person is about twice their section, certain types of jobs can be instrumental population share, whilst the contribution of in reducing poverty. households headed by highly educated persons are almost nonexistence. This section summarizes recent data from the ‘Ghana Labor Force Report’ published in August Despite the reduction in poverty rates, inequality 2014 by the Ghana Statistical Service which increased and remains prevalent. Nationally, the presents information on the trends, types and Gini coefficient increased slightly from 41.9 in changes in the Ghanaian labor force. Comparisons 2005/06 to 42.3 in 2012/13. The increase, even are made with an earlier version of the survey though small, implies that Ghanaians did not conducted in 2005/06. benefit equally from the robust growth rates since 2005 (figure 2.4). The Ghanaian Statistical Service reports a national rate of unemployment of 4.1 percent— Among regions, urban regions seem to have those over 15 years without jobs and potentially experienced a more equitable growth. While available for jobs— in 2012/13. There is variation Accra’s Gini coefficient fell from 41.5 to 36, the between genders (the male rate is reported as 3.9 Rural Coastal region Gini increased from 34 to 43. percent and female rate at 4.3 percent) and On the other hand, all the rural areas experienced whether job seeking citizens are living in rural or a worsening inequality between the two periods, urban areas (the rural rate is 3.3 percent and the with the rural coastal been the worst affected. urban rate is 4.9 percent); see Table 2.2. The worsening inequality in the rural coastal localities is largely due to worsening levels of These unemployment numbers are very small inequality in the Volta region of Ghana, where when compared globally, but care must be taken households in the rural localities are in interpreting these numbers; as is the case in predominantly engaged in fishing. any economy with a large informal sector1. In such cases, standard indicators of unemployment A more detailed analysis of the povery trends and offer only a partial and not very useful description determinants needs to be undertaken in order to of the labor market. Many people can be labeled understand how to reduce the inequlity in Ghana. ‘employed’ in this manner whilst being engaged in activities with limited productivity, 8. Employment trends in Ghana underemployment and very low associated incomes. Jobs are a critical concern in Ghana, for government, the business community, and all Ghanaians. Employment opportunities are Table 2.2: Activity and Employment Status (15 years and over) Economically active percent Economically not active percent Employed Unemployed Male Female Total Male Female Total Male Female Total Urban 73.2 67.1 69.9 4.7 5 4.9 22.1 27.9 25.3 Rural 83.6 79.8 81.6 3.1 3.4 3.3 13.3 16.8 15.1 All Ghana 78.3 73 75.4 3.9 4.3 4.1 17.8 22.7 20.4 Source: Ghana Labor Force Report (August 2014) 1 Interestingly the term informality regarding sector of the economy was first coined in a paper about Ghana. Ghana Economic Update October 2014 14 The unemployment numbers exclude those the person is willing and available to engage. On reported to be ‘economically not active’, i.e. not average 33 percent of employed people’s time is seeking work. This group categorizes 20 percent deemed to be inactive; i.e. there is of the population (15 years and over) and includes underemployment (Figure 2.6). The extent is those: studying; performing household duties; higher in rural areas (41 percent) and relative to retired; disabled and persons unable to work on urban areas (26 percent) and for females (37 account of their age. This group has decreased percent) relative to males (30 percent). considerably from about 30 percent of the population reported in an earlier round of the Most employed people in Ghana are engaged in survey (GLSS5) conducted during 2005/06. agri-business (48 percent), and a further 36 percent are employed in the informal private There is also some variance in the activity rates sector (Figure 2.7). Only 8.2 percent are working across age groups. Almost 90 percent of adults in the formal private sector and 7.6 percent aged 25 to 64 years are reported as economically across the public sector. This is further reflected active compared to 57 percent of those aged 65 in reported number of self-employed workers (52 or more, 52 percent of those between 15 and 24 percent) and that only are 20 percent are wage years and 28 percent of those between 5 and 14 earners (Figure 2.6). years (Figure 2.5). When everyone above 7 years Figure 2.6: Proportion of time underemployed of age is considered, 60 percent of the population is reported as economically active compared to the 54.1 percent reported in the previous survey (for those over 7 years). Interestingly the most significant change between the surveys there has been an increase of those aged 15-24, from 39 percent deemed economically active to 52 percent. Figure 2.5: Proportion of people economically active by the age group Source: GLSS6, Ghana Statistical Service, August 2014. The combined share of workers that are engaged in the informal or agri-business sectors is 84 percent. This suggests that the formal sector (both public and private) cannot generate jobs in sufficient numbers and people are pushed into the informal sector. These sectors are made up predominantly of Source: GLSS5 and GLSS6, Ghana Statistical Service. small- and medium-size businesses which consist of producers, wholesalers, retailers, and service Even when people are deemed economically providers. These businesses are staffed and run active and employed, there are reported levels by family workers, casual wage workers, and of under-employment. Time-related home-based work. Activities include: farming; underemployment exists when the hours of work street vending; artisans and craft-work; trading; of an employed person are insufficient in relation and food processing, among others. to an alternative employment situation in which Ghana Economic Update October 2014 15 When economic sectors are considered, the There has been considerable nominal growth in largest share (45 percent) of those employed, are basic wages since 2007-08 (Figure 2.10). This is active in the agriculture, forestry, and fisheries expected given the rates of inflation recorded, but sector. This is followed by the wholesale and there is a considerable range in the magnitude of retail sector (20 percent) and manufacturing (9 the changes. For example nominal wages in percent) (Figure 2.8). agriculture, forestry and fishing—where the majority of workers are engaged—have only The average hourly earnings of Ghanaian increased by 102 percent, whilst wages in the workers is reported as Ghs1.82 (US$0.49 in public sector and defense have increased by 495 September 2014), but there is considerable percent. range across occupations (Figure 2.9). The lowest earnings are in agriculture, (where a significant Figure 2.9: Average basic hourly earnings (GH₵), selected portion of workers are engaged) and the highest industries in public administration and defense; education; and electricity, gas and air conditioning supply. This reflects considerable inequality. Figure 2.7: Categories of Employment Source GLSS6, Ghana Statistical Service, August 2014. Source: GLSS6, Ghana Statistical Service, August 2014. Figure 2.10: Nominal growth in average basic hourly earnings (GHs); 2007-2012, selected industries Figure 2.8: Employment by economic sector Source GLSS6, Ghana Statistical Service, August 2014. Source: GLSS6, Ghana Statistical Service, August 2014 Ghana Economic Update October 2014 16 Appendix Table 1: Ghana - Economic Indicators, 2000–13 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Avg. 2012 2013 2014 '00–'11 est. estimate forecast Income and Economic Growth GDP growth (annual percent) 4.2 4.5 4.8 5.2 5.4 6.2 4.6 6.5 8.4 4.0 8.0 15.0 6.4 7.9 5.4 6.0 GDP per capita growth (annual percent) 1.6 1.9 2.2 2.6 2.7 3.5 1.9 3.9 5.8 1.4 5.4 11.8 3.7 5.3 2.8 3.4 GDP per capita (US$) 393 387 482 556 706 824 953 1,127 1,266 1,124 1,358 1,580 896 1,622 1,730 1,319 GDP per capita, PPP (current international US$) Private Consumption growth (annual percent) -2.4 31.8 41.5 23.7 42.3 23.2 19.3 22.6 35.8 10.2 26.5 2.5 23.1 21.2 29.7 21.5 Gross Fixed Investment ( percent of GDP) 21.4 23.3 17.8 20.4 23.1 24.1 21.6 22.9 23.0 23.8 23.0 18.6 21.9 33.2 31.0 32.2 Gross Fixed Investment - Public ( percent of GDP) 6.3 9.3 4.0 6.2 7.5 7.4 7.7 8.7 9.1 7.1 7.6 6.2 7.3 6.6 6.0 8.2 Gross Fixed Investment - Private ( percent of GDP) 15.0 14.0 13.8 14.2 15.6 16.7 13.9 14.2 13.8 16.7 15.4 12.3 14.6 26.6 25.0 24.0 Money and Prices Inflation, consumer prices (annual percent, end of year) 40.5 21.3 15.2 23.6 11.8 14.8 10.9 12.7 18.1 16.0 8.6 8.6 16.8 8.8 13.5 14.0 Inflation, consumer prices (annual percent, period average) 25.2 32.9 14.8 26.7 12.6 15.1 10.2 10.7 16.5 19.3 10.7 8.7 16.9 9.2 11.3 13.9 Treasury Bill Rate ( percent) 39.1 40.9 25.1 28.6 17.3 15.4 10.2 9.9 17.8 25.4 14.1 10.7 21.2 18.7 18.8 19.5 Nominal Exchange Rate (End of period) 0.7 0.7 0.8 0.9 0.9 0.9 0.9 1.0 1.2 1.4 1.5 1.6 1.1 1.8 2.20 3.20 Real Exchange Rate Index (2005=100) 92.0 93.0 92.6 92.8 91.5 100.0 105.3 104.5 99.5 91.6 97.6 92.7 96.1 93.7 91.2 101.3 Fiscal Revenues ( percent of GDP) 13.4 11.4 12.7 17.0 17.5 16.7 17.1 17.5 16.0 16.5 16.8 19.3 16.0 18.8 16.9 17.2 Expenditures ( percent of GDP) 18.8 15.3 15.9 19.6 20.3 18.7 21.4 22.7 24.0 20.5 22.7 20.7 20.1 27.0 25.6 24.9 Current ( percent of GDP) 12.5 10.5 11.9 13.5 12.7 11.3 13.7 13.9 14.8 13.4 15.1 14.5 13.2 20.4 19.6 17.5 Capital ( percent of GDP) 6.2 4.9 4.0 6.1 7.6 7.4 7.7 8.7 9.1 7.1 7.6 6.2 6.9 6.6 6.0 7.4 Overall Fiscal Balance before grants( percent of GDP) -6.8 -5.2 -5.7 -6.6 -6.9 -6.1 -8.1 -9.3 -11.2 -8.8 -9.6 -6.0 -7.5 -13.2 -10.6 -12.1 Overall Fiscal Balance after grants( percent of GDP) -5.3 -4.0 -4.4 -3.3 -3.0 -2.8 -4.7 -5.6 -8.5 -5.8 -7.2 -4.0 -4.9 -11.7 -10.1 -11.3 Primary Fiscal Balance ( percent of GDP) after grants 0.2 -2.0 -0.2 0.9 -0.4 -0.6 -2.6 -3.7 -6.2 -3.0 -4.1 -1.4 -1.9 -7.5 -5.4 -3.5 Non-oil Primary Fiscal Balance as percent of GDP 0.2 -2.0 -0.2 0.9 -0.4 -0.6 -2.6 -3.7 -6.2 -3.0 -4.1 -2.5 -2.0 -8.8 -7.2 -5.2 Total Public Debt ( percent of GDP) 108.2 105.0 86.4 85.6 60.4 50.6 26.9 30.5 31.5 36.1 45.7 41.1 59.0 51.7 55.6 66.9 External Public Debt ( percent of GDP) 88.2 83.2 69.0 69.3 44.8 37.0 10.7 15.0 16.2 19.5 20.0 21.0 41.2 22.1 23.8 28.9 External Accounts Export real growth ( percent, yoy) -3.5 -3.6 10.2 24.6 5.5 3.6 27.1 17.1 26.3 10.8 36.3 60.6 17.9 5.9 1.5 -0.1 Import real growth ( percent, yoy) -0.8 2.6 -4.0 20.1 31.7 24.4 26.3 19.4 27.3 -21.6 35.7 45.1 17.2 12.2 -0.9 -16.3 Merchandise exports (current US$ millions) 1936 1867 2057 2562 2704 2803 3563 4172 5270 5840 7960 12785 4,460 13543 13752 13735 of which: main export (i.e. oil) 705 618 689 830 840 946 1277 1734 2246 2551 3804 4920 1,763 -17763 -17600 -14736 - Merchandise imports (current US$ millions) -2758 -2831 -2717 -3263 -4297 -5347 -6754 -8066 -10268 -8046 10922 -15843 -6,759 -17763 -17600 -14736 Services, net (current US$ million) -198 -169 -180 -451 -554 -354 -277 -307 -613 -1267 -2060 -3090 -793 -3108 -3797 -3102 Workers' remittances, net (BoP, current US$ millions) 496 600 680 1009 1278 1539 1645 1834 1970 1788 2123 2369 1,444 2148 1859 2135 Current account balance before grants (BoP, current US$ millions) -525 -532 -160 -142 -868 -1359 -1823 -2367 -3642 -1685 -2969 -3770 -1,654 -5,181 -5,784 -3,372 as percent of GDP -7.1 -7.2 -1.7 -1.3 -6.0 -7.8 -8.9 -9.6 -12.8 -6.5 -9.2 -9.7 -7.3 -12.9 -12.1 -9.8 Current account balance after grants (BoP, current US$ millions) -371 -270 -1 240 -324 -783 -1452 -2158 -3400 -1395 -2699 -3549 -1,347 -4924 -5704 -3278 as percent of GDP -5.0 -3.6 0.0 2.1 -2.2 -4.5 -7.1 -8.7 -11.9 -5.4 -8.4 -9.2 -5.3 -12.3 -12.0 -9.5 Ghana Economic Update April 2014 17 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Avg. 2012 2013 2014 '00–'11 est. estimate forecast Foreign Direct Investment (current US$ millions) 59 56 50 50 139 145 636 855 1806 2897 2527 3222 1,037 3293 3226 2409 External debt outstanding, total (current US$ million) 6021 6026 6131 7549 6448 6348 2177 3586 4035 5008 6255 8135 5,643 9154 11342 12556 External debt outstanding, total ( percent of GDP) 81.8 81.0 64.7 67.5 44.3 36.5 10.7 14.5 14.1 19.4 19.4 21.0 39.6 22.9 23.8 36.3 Multilateral debt ( percent of total external debt) 70.5 69.8 71.6 72.6 88.9 94.2 68.3 47.7 50.3 49.2 49.0 51.4 65.3 55.1 39.6 37.9 Debt service ratio ( percent of goods and nfs) 22.9 19.1 16.7 13.1 15.4 11.2 12.2 3.3 3.6 3.1 2.8 2.4 10.5 2.4 3.4 4.5 Population, Employment, and Poverty Population, total (millions) 18.4 18.9 19.4 19.9 20.4 20.9 21.4 22.0 22.5 23.1 23.7 24.3 21.2 24.9 25.6 26.2 Unemployment Rate Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Poverty headcount ratio at national poverty line ( percent of population) 39.5 28.5 34.0 Na Na Na Poverty headcount ratio at US$ 1.25 a day (PPP) ( percent of population) Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Poverty headcount ratio at US$ 2 a day (PPP) ( percent of population) Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na Na 42.8 perce Inequality - Income Gini nt Na Na Na Na Population Growth (annual percent) 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 2.6 Life Expectancy 57.9 57.6 57.2 56.9 56.7 56.5 56.5 56.5 56.6 56.8 60.6 64.2 57.8 64.6 Na Na Other Indicators GDP (current LCU, billions) 4.0 5.3 7.5 9.7 13.1 15.8 18.7 23.2 30.2 36.6 46.0 59.8 22.5 75.0 93.5 114.8 GDP (current US$, billions) 7.4 7.4 9.5 11.2 14.6 17.4 20.4 24.8 28.5 25.8 32.2 38.8 19.8 40.0 47.7 34.6 Doing Business Rank 2/ Na Na Na Na Na 102.0 94.0 82 87 97 77 67.0 Na Na Na Na HDI (Human Development Index) ranking 3/ 0.43 0.44 0.45 0.46 0.46 0.46 0.47 0.54 0.46 0.56 0.56 Na CPIA (overall rating) Na Na Na Na Na 3.90 3.93 4.00 3.90 3.80 3.90 3.90 3.9 3.8 3.7 Na Economic Management Na Na Na Na Na 4.2 4.2 4.0 3.7 3.7 3.7 3.8 3.9 3.5 3.0 Na Structural Policies Na Na Na Na Na 3.8 3.8 4.0 4.0 4.0 4.2 4.2 4.0 4.0 4.0 Na Policies for Social Inclusion and Equity Na Na Na Na Na 3.7 3.8 3.9 4.0 3.9 4.0 3.9 3.9 4.0 4.0 Na Public Sector Management and Institutions Na Na Na Na Na 3.7 3.9 3.9 3.9 3.8 3.7 3.7 3.8 3.7 3.7 Na Source: Government authorities; IMF macroeconomic framework; World Bank World Development Indicators and staff estimates. Note: Inequality - Income Gini: A summary measure of the extent to which the actual distribution of income, consumption expenditure, or a related variable differs from a hypothetical distribution in which each person receives an identical share. The coefficient is a measure of the inequality of a distribution: a percentage of 0 expresses total equality and a percentage of 100 expresses maximal inequality. Life expectancy (yrs): Life expectancy at a specific age is the average number of additional years that a person of that age could expect to live if current mortality levels observed for ages above that age were to continue for the rest of that person’s life. In particular, life expectancy at birth is the average number of years a newborn would live if current age-specific mortality rates were to continue. Human Development Index (HDI): Summary measure for assessing long-term progress in basic dimensions of human development. In 2010 HDI was calculated for 169 countries. Doing Business Indicators: Provide objective measures of business regulations for local firms in 183 countries. World Bank Country Policy and Institutional Assessment (CPIA): Rates the policy and institutional performance of approximately 135 IBRD and IDA recipient countries. Ratings range from 1 (unsatisfactory for an extended period) to 6 (good for an extended period) Ghana Economic Update October 2014 18