Ghana's Economy Expands at Slowest Pace in 26 Years in 2016

(Bloomberg) -- Ghana's economy expanded at the slowest pace in 26 years in 2016 as a shutdown at oil and gas fields weighed on output.

The growth of gross domestic product in West Africa's second-largest economy slowed to 3.5 percent last year, from 3.9 percent in 2015, Baah Wadieh, acting government statistician at the Ghana Statistical Service, told reporters Wednesday in the capital, Accra. That is the lowest rate since 1990, according to data from the International Monetary Fund, and below a government forecast of 3.6 percent.

The oil and gas sector contracted 16.9 percent in 2016, agriculture expanded by 3 percent and manufacturing grew 2.7 percent, Wadieh said. GDP expanded 4.1 percent in the fourth quarter compared to the last three months of 2015, according to the statistics office.

Former President John Dramani Mahama turned to the IMF in 2015 for a loan of almost $1 billion to help rein in the budget deficit and arrest declines in the currency as lower prices for gold, cocoa and oil exports and a nationwide electricity shortage weighed on the economy. An extension of the credit facility program “may be considered, if the authorities request it to achieve the country's economic objectives,” a spokesman for the Washington-based lender said on April 13.

The Bank of Ghana's Monetary Policy Committee cut the benchmark interest rate for a second time in four months on March 27 as the cedi recovered from record lows and inflation slowed to the lowest rate in more than three years. Two days later, Abdul Nashiru Issahaku resigned as governor. He was replaced by Ernest Addison.

Ghana's three-month old government, led by President Nana Akufo-Addo, plans to increase spending to boost the economy and reduced taxes on goods including fuel.

To contact the reporter on this story: Andre Janse van Vuuren in Johannesburg at ajansevanvuu@bloomberg.net.

To contact the editors responsible for this story: Rene Vollgraaff at rvollgraaff@bloomberg.net, Pauline Bax