That’s right. Ghana announced today that its GDP isn’t actually $15.7 billion, but rather $25.6 billion. This sudden 63% jump occurred not because of a sudden oil find (the oil doesn’t arrive until next month), but rather because of a technical rebasing of the way GDP is calculated. Turns out that services like telecoms are a lot bigger than everyone believed yesterday. Here are a few of my quick reactions:
- Congratulations! It’s always great news to hear that you may be doing even better than you thought. Ghana has long aspired to be a middle-income country by 2020, and this now seems like it will happen many years early. Accra certainly feels like a middle-income city.
- Boy, we really don’t know anything. Over the past thirty years Ghana has been one of the most scrutinized, measured, studied, picked-over economies in Africa. (yes, I too did my PhD on Ghana…) Yet, we were all taking as gospel a number that was off by a tremendous margin. If we are nearly two-thirds wrong on Ghana’s GDP, what hope can we possibly have in stats for Chad? Everyone knows that data is dubious, but this seems to add a whole new level of doubt.
- Ghana’s indicators are going to all change. If GDP is 63% larger than we thought, the denominators for a lot of ratios are also way off. This is perhaps both good and bad. Since debt/GDP drops from 32% to 19%, this will bolster the government’s case that it can borrow lots more from international capital markets. But it also means that government revenues, which was thought to be a healthy 20% of GDP or more is probably really closer to 12%.
- I’m still confused… but it probably doesn’t matter. The Reuters article quotes the government statistician as estimating GDP per capita at $1318 instead of $753. This doesn’t add up to the total GDP figures also given since this implies a 75% increase. If the $1318 is correct, then that either implies that the government thinks there are only 19.4 million people instead of the normal estimates of about 24 million. Or, if the total GDP number of $25.6 billion is right, then per capita GDP is really $1067 per capita. (I think I’m already violating my lesson from #2.)
- Ghana will graduate from IDA sooner than we thought. Whatever the exact figure, it’s clear that Ghana will graduate from the World Bank soft-loan window very soon. The eligibility threshold is currently $1165.