The think-thank said: “In spite of the achievement of growth rates of slightly above six per cent the relative macroeconomic stability achieved during the period 2001-2005, marked by declining inflation and interest rates and low government budget deficits, the economy showed clear signs of stress in 2006 and 2007.”

The IEA stated in its annual 2007 Economic Review and Outlook documents made available to AfricaNews in Accra that the performance of the economy deteriorated further in the first half of 2008 (January to June 2008) with rising inflation which peaked at 18.4 per cent in June 2008.

The Economic Review presents an overview of the performance of the economy during the calendar year 2007 and outlook for 2008 and beyond based on provisional data released by the Ghana Statistical Service.

The IEA 2007 Economic Review and Outlook Survey was conducted by a team of economists including Dr Kwabena Asomanin Anaman, IEA Head of Economic Centre and Director of Research, Professor Alhassan Wayo Seini, IEA Senior Fellow, Prof John Asafu-Adjaye, IEA Senior Fellow and Mrs Charity Osei-Amponsah, IEA Research Assistant.

The rest are Dr Daniel Bruce Sarpong, Senior Lecturer and Head, Department of Agricultural Economics and Agribusiness, University of Ghana, Dr. Kofi Marfo, Mrs Abigail Abandah-Sam, Mr Matthew Armah and Mr Martin Esan Benjamin, all Seniors Executive Officers of Millennium Development Authority (MiDA), Accra.

Major deficits

The IEA Economic Review identified three major deficits - government budget, balance of trade and balance of payment deficits as the causes of the stress in the economy.

The report also noted that international lending agencies, such as the International Monetary Fund, said the country’s international reserves declined to 2.4 months as at the end of June 2008, less than the minimum three months required.

According to the IEA it predicted in early January 2008 that the average inflation rate would increase to about 15 per cent in 2008. The rate of inflation in October was 17.30 per cent, down from 17.89 per cent a month earlier, Dr Grace Bediako, Government Statistician, told a press conference on Friday.

The IEA suggested that the improvement of the economy in the short to medium term period would depend on several factors including moderation of the levels of world oil prices, and the extent of production from newly-discovered offshore oil fields.

Other means to improve the economy would depend on continued strong support by Ghana’s development partners through grants and loans, strong financial discipline of government subsides, significant reduction of government waste and above all continuous political stability especially linked to transparent and peaceful national elections in December 2008.