Per capita GDP increases to US$2,035 after rebasing …but has little effect on poverty

The measure of a country’s total economic output divided by its number of people – otherwise known as per capita GDP – increased from US$1,938 in 2016 to US$2,035 in 2017 after the Ghana Statistical Service rebased the economy.

The rebasing of national accounts series by the GSS means replacing the old base-year (2006) used for compiling the constant price estimates to a new and more recent base-year (2013).

In cedi terms, the per capita GDP is now GH¢8,863, up from the GH¢7,597 recorded in 2016 and representing a 14.2 percent increase.

Prior to the rebasing, however, the income per capita for 2017 was US$1,632; meaning the new rebased figure of US$2,035 has increased by 24.6 percent.

The new figures from GSS show that the country’s economy is now valued at GH¢256.6billion – up from the GH¢205.9billion recorded in 2016. The difference in figures shows an expansion of 24.6 percent between the two years.

Even though the rebased figures show an expansion in the country’s economic activities, they do not necessarily mean a reduction in poverty.

Another report from the GSS, dubbed ‘Ghana Living Standards Survey Round 7’ has shown that Growth Elasticity of Poverty (GEP), which essentially measures the growth in GDP and its impact on poverty, indicates that the country’s growth is not commensurate with a reduction in poverty.

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The report shows a 1 percent growth in GDP resulted in just a paltry 0.07 percent reduction in the poverty rate between 2013 and 2017 – reflecting that economic growth in Ghana has become less pro-poor.

The report further stated that more than 6.8 million of the country’s population live on less than US$1 a day.

“Ghana has consistently been experiencing poverty reduction since the 1990s. Ghana achieved the MDG1 of halving its poverty level in 2013. 23.4 percent of Ghanaians are poor based on 2017 population projections; 6.8 million people are poor and therefore could not afford to spend GH¢4.82 per day in 2016/17 (GH¢1,760.80 per year in 2016/17),” the report states.

Again, the report notes that 2.4 million Ghanaians – representing 8.2 percent – live in abject poverty as they cannot afford to spend up to GH¢3 a day on food.

The three regions of the north—Northern, Upper East, and Upper West—recorded the highest poverty rates. The report adds that 26 percent of all poor persons in Ghana are in the Northern Region.

The Northern Region has over the period contributed to poverty more than any other region. The three northern regions, the report states, contribute more than 40 percent to national poverty. These regions, together with the Volta Region, did not experience consumption growth.

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A few months ago, the World Bank made a salient observation in its Ghana Systematic Country Diagnostic (GSCD) – which is the new strategy it has developed to identify the most important challenges and opportunities a country faces in ending extreme poverty and boosting shared prosperity.

It said that to maintain high levels of GDP per capita growth, Ghana needs to strengthen contributions of human capital as well as total-factor productivity (TFP) – which is the portion of output not explained by traditionally measured inputs of labour and capital used in production – to the growth process.

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