The Institute for Fiscal Studies (IFS) in the latest review of the 2020 national budget has questioned the average growth projection by government beyond next year.
Real GDP is expected to record an average growth rate of 5.7 percent over the medium term, with GDP growth projected at 6.8 percent, 4.9 percent, 4.6 percent and 6.5 percent in 2020, 2021, 2022 and 2023 respectively.
These slowing growth projections for 2021 and 2022 have been made in spite of government’s major reforms and initiatives across the various sectors, particularly in the agriculture sector of the economy.
At the Post 2020 Budget Analysis, the Executive Director of IFS, Professor Newman Kusi said, “despite all these things (government initiatives), it is baffling to understand why the economic growth will decline after 2020.”
According to the 2020 budget, Agriculture Sector is projected to grow at an average rate of 5.4 percent over the medium-term. This is informed by forecasted growth rates of 5.1 percent, 5.8 percent, 5.3 percent, and 5.3 percent in 2020, 2021, 2022 and 2023, respectively. The sector’s medium-term performance is expected to be driven by the crops sub-sector, as a result of productivity gains in areas targeted under the Planting for Food and Jobs programme, among others.
Industry Sector is expected to grow at an average of 5.2 percent over the medium-term, with growth rates of 8.6 percent in 2020, 3.3 percent in 2021, 2.3 percent in 2022, and 6.7 percent in 2023, respectively.
Mining and Quarrying is also expected to record a slowdown in growth from 13.1 percent in 2019 to 10.1 percent in 2020, and further to 1.2 percent in 2021 as a result of an expected sharp decline in crude oil production from existing fields. The decline is forecasted to continue into 2022. However, growth in the sector is projected to recover strongly in 2023, galvanized by production from the Pecan field. Growth in the Petroleum (Oil and Gas) sub-sector is projected at 7.3 percent for 2020.
The Services Sector is projected to grow at an average rate of 6.3 percent, driven by strong performances in Health and Social Work (20.2 percent), and Public Administration and Defence; Social Security (7.4 percent). The Financial and Insurance Activities, and Real Estate sub-sectors are expected to record the lowest average growth rates of 2.2 percent each over the medium-term.
The Services sector is projected to remain the dominant sector in terms of share of total sectoral value-added national output (GDP) in the medium-term, followed by Industry and Agriculture.