Despite systematic growth since 2001, Ghana's economy is still vulnerable and open to the vagaries of external factors, Professor Ernest Aryeetey, Director of Institute of Statistical, Social and Economic Research (ISSER) said on Monday.
Presenting the findings of the State of the Ghanaian Economy Report 2007, Prof. Aryeetey attributed the trend to the structure of the economy, which had remained unchanged for the past 50 years.
"There is no guarantee that growth rate will be repeated because of the impact of global factors on our economy," he said.
The economy is heavily dependent on the export of few primary commodities with cocoa, gold and timber the dominant exports, which prices are influenced largely by external factors.
By end 2007, real GDP growth was marginally up from 6.2 per cent to 6.3 per cent, but short of the 6.5 per cent target and per capita growth went up 2.8 per cent in 2006 to four percent in 2007.
The marginal increase in the growth figure is due, among other factors, to slower growth in the agricultural sector following poor rainfall in 2006.The energy crisis in 2006 and most 2007 had ripple effects on the service and industrial sectors.
The agricultural growth rate declined from 4.5 per cent in 2006 to 4.3 per cent in 2007, well below the 6.1 per cent target.
While industrial growth also fell from 9.5 per cent in 2006 to 7.4 per cent in 2007, services growth improved from 6.5 per cent in 2006 to 8.2 per cent in 2007.
Prof Aryeetey said sustained growth was only possible through structural changes in the economy and called for pursuit of targeted Foreign Direct Investment into sectors such as agriculture to propel growth.
While the oil discovery could provide a huge opportunity for diversification, he said, it could also be a threat for economic management depending on how and to which sectors the resources were directed.
He said development dividend could be realized from revenues from the oil sector when properly channelled to productive sectors and not spent on consumption items such as payment of enhanced salaries and importation of a fleet of cars, among others.
On social protection for development, Prof. Aryeetey said there was the general acceptance of the principle that vulnerable and excluded groups should be given priority in social protection provisions.
Launching the publication, Mr Joseph Henry Mensah, Chairman National Development Planning Commission, said there was the need for the Bank of Ghana to take a second look at inflation targeting as a major monetary policy thrust.
He said there was the temptation to believe that once inflation had been taken care of, it would automatically result in growth.
Dr Augustine Fritz Gockel, Senior Lecturer Department of Economics, University of Ghana, questioned the reliability of the GDP figures that are used in the budget.
He said since GDP was the base for all economic action and it was important that the data generated provided an accurate picture as much as possible.
"When the GDP data is wrong, whatever we do will be wrong," he said.
On inflation, Dr Gockel said although there was a marginal decline in July, the country was not out of the woods yet.