Economic growth not felt on the ground, says Finance Professor
Professor Lord Mensah, a Finance Professor at the University of Ghana Business School (UGBS), has expressed skepticism about Ghana’s positive economic growth rates, stating that the growth is not translating to improved living standards for Ghanaians.
According to Prof Mensah, the country’s economic growth is largely driven by government spending, which does not necessarily trickle down to individual Ghanaians. He emphasized that real economic growth occurs when government spending translates to private sector investment and individual spending.
“When we talk about growth rate, that is economic output, you are looking at government spending, business spending, individual spending, households, and then import-export net effect of that. If you put all together and you disaggregate these expenditure lines, you’ll come to realize that when government spends, it goes up into an economic output, straightforward,” he explained.
The Ghana Statistical Service (GSS) recently announced a 4.7 % expansion in Ghana’s Gross Domestic Product (GDP) in the first quarter of 2024, marking a year-on-year increase of 0.5 percentage points over the same period in 2023.
Prof Mensah questioned whether individual Ghanaians are experiencing an increase in spending, which is a crucial indicator of economic growth.
He noted that while Ghana’s growth has been driven by government spending in recent years, the spending should tilt towards the private sector and individuals over time.
Despite the recorded economic growth, Prof Mensah believes that it is not felt on the ground, and individual Ghanaians are not experiencing an improvement in their living standards.
He emphasized that economic growth should be measured by considering government spending, business spending, individual spending, and the net effect of imports and exports.
