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Prez Mahama disagrees with CEPA, others over Dutch Disease

  • SOURCE: | qwesa2big
  • PRESIDENT John Mahama, on Tuesday, disagreed with concerns from some policy think-tanks and economists that the Dutch Disease, an economic ailment associated with oil production, had crept into the economy and was manifesting in the slowdown in growth in the agricultural sector.

    The President explained at the first IEA Presidential Debate in Tamale that the slowdown in the rate of growth in the sector was due to the depletion in fish and timber which is consequently causing growth in the fishing and forestry and logging sub-sectors of agric to slowdown.
    “The slow growth in agricultural is as a result of a slowdown in growth in the forestry and logging and fishing sub-sectors.” he said.

    “There is a limit to the number of timber you can file at a time. The timber in our forests is being depleted and the same applies to fish and so the decline in growth in these sub-sectors causes growth in the entire agricultural sector to slow and not because of any Dutch Disease as some people would want us to believe,” the President said in a rebuttal to earlier comments by Nana Akuffo Addo, the Presidential Candidate of the NPP.

    Nana Addo had intimated in a response to a question that the economy was already suffering from the Dutch Disease as growth in agriculture continues to slope.

    Growth in the agriculture sector has dipped continually since 2008, slowing from 7.4 per cent in that year to 0.8 per cent in 2011, according to data obtained from the Ghana Statistical service.

    Although the data revealed that growth in the crops and livestock sub-sectors have been slopping, that of the fishing and forestry and logging sub-sectors have continually jumped down, year-on-year.

    In 2008 for instance, growth in the forestry and logging sub-sectors declined by 3.3 per cent but recovered to 0.7 per cent in 2009.

    It recovered further to 10.1 per cent in 2010 only to jump down to 14 per cent in 2011, the data further indicated.

    Provisional data from the GSS currently estimates that growth in that sub-sector of agric will decline further by 18 per cent in 2012

    On the fishing sub-sector, the data shown that the sub-sector grew by 17.4 per cent in 2008, declined by 5.7 per cent in 2009 and slightly recovered in 2010 with a growth rate of 1.5 per cent.

    It, however, slumped again in 2011, growing at negative 8.7 per cent with the estimates showing that the sub-sector will grow by 2.3 per cent this year.

    Drawing his conclusions from the above, President Mahama said “and so I do not know where those saying these things (that the Dutch Disease is in the economy already) get their facts from.”

    The President’s comments come on the back of earlier assertions by the Centre for Policy Analysis (CEPA) and the Institute of Economic Affairs (IEA) to the effect that the economy was already suffering from the Dutch Disease.

    The Executive Director of CEPA, Dr Joseph Abbey, mentioned the persistent widening of the current account resulting from sharp rise in imports, loss in competitiveness in exports and import competing substitutes and the deceleration in growth rates in import-competing sub-sectors of manufacturing and agriculture as evidence of the Dutch Disease in the country.

    Dr Abbey said at the launch of a publication on the economy last week that “the agricultural sector has shown a persistent deceleration in the growth performance from about the third quarter of 2010. This was the result of the contraction in the livestock, forestry and fisheries subsectors – also considered as import-competing,” the Executive Director of CEPA noted.

    He, however, admitted that it was rather difficult “to definitely say that Ghana has the Dutch Disease.”

    The Dutch Disease occurs when oil producing countries place more emphasises on their oil sectors to the neglect of other sectors such as agriculture and manufacturing.

    When that happens, the country produces less and imports more and that leads to a rise in the value of its national currency against its trading partners.

    Dr Abbey has meanwhile maintained his stance on the development but declined to comment further on the matter, saying that he is not prepared to be engaged in a political debate.

    Daily Graphic

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