Ghana To Become An Oil Economy

Ghana an open economy, relatively well integrated into the global trading system and critically dependant on Cocoa, Gold, and Oil is expected to mark the transition from 100 years of a Cocoa-economy to an oil economy.

This was revealed during the lunch of a publication the year 2010 from a Cocoa Economy to an Oil Economy by the centre for Policy Analysis (CEPA), held in Accra.

Dr. J .S. L  Abbey an Executive Director of CEPA in a presentation said , CEPA expects inflation to continue to decelerate into the third quarter of 2010, into the upswing phase of the 3 year inflation cycle and that a trend reversal is expected  with a gradual rise inflation reaching a peak in the first quarter of 2012.

He said, with  a sacrifice ratio a measure of the economic growth foregone needed to achieve the inflation reduction is estimated at nearly one by the international  Monetary  Fund (IMF),the (4%) points reduction in the rate of inflation from (20%) to (16%) per annum was achieved in 2009 which cost the nation an economic slack, equivalent to (4%) point of Gross Domestic Product (GDP).

However , CEPA has projected that a cumulative of (5.7%) point reduction in the rate of inflation in 2010 was from (16%) in December 2009 to (10.3%) for December 2010 would require a corresponding loss in output equivalent to (5.7%) points of GDP.

 

This measure of putout foregone will  lead to loss  of jobs that would be used to produce that output ,and will particularly severe for new entrants into the labour force especially the youth.    

MPC Press Release dated April  16,2010 and pointed out that the economy is indeed slowing down due to the fall in non-oil imports, reduced  spending by tourists, a slowdown of the private sector  transfers to SSINIT which is indicated as a low rate of job creation ,reduction in value added tax (VAT) collections, an indicator of a reduction in consumer spending and tightening of commercial bank credit to the private sector.