Ghana’s industrial sector experienced significant growth in the second quarter of 2024, posting an 8.2% year-on-year increase, according to the Ghana Statistical Service (GSS).
The boost was driven largely by the mining, quarrying, and manufacturing sub-sectors, despite persistent challenges in the energy sector.
The latest Index of Industrial Production (IIP) figures point to a strong performance in key industrial segments, reflecting a resurgence in the economy even as power supply issues continue to pose risks.
This growth is seen as a positive indicator for the country’s overall economic health, though experts warn that energy-related setbacks could hinder sustained progress.
The mining and quarrying sector remains the dominant driver of industrial growth, accounting for over half of the sector’s total output at 53.26%.
The sector posted an 8.2% year-on-year growth in the second quarter, largely propelled by the mining of metal ores, which saw a significant 12.1% jump. Additionally, other mining and quarrying activities experienced a remarkable 24.8% surge.
With sustained global demand for minerals such as gold and manganese, analysts project that this sector will continue to play a major role in industrial expansion in the coming quarters. This growth is expected to hold, especially as metal ores continue to fuel international markets.
Manufacturing also performed well, growing by 8.3% year-on-year, buoyed by a sharp increase in the production of basic metals, which grew by 18.5% over the previous quarter. The manufacture of transport equipment also saw a notable 20.9% rise, underscoring the sector’s potential to contribute to overall industrial growth.
However, not all manufacturing sub-sectors recorded positive results. Food production, for instance, suffered a 12.3% quarterly decline, hit hard by supply chain disruptions and rising input costs. This mixed performance highlights the complexities manufacturers face as they navigate global economic challenges.
In stark contrast to the positive growth in mining and manufacturing, the energy sector faced notable struggles. The electricity and gas sub-sector saw a 1.4% decline year-on-year, with a quarterly drop of 4.3%. The sector’s underperformance reflects ongoing challenges in energy distribution and supply, raising concerns about the long-term impact on industrial activity.
The shortfall in energy production is a significant concern for the industrial sector, as continued power outages or supply disruptions could limit the ability of businesses to maintain production at optimal levels.
The water supply, sewage, and waste management sub-sector experienced modest gains, with a 1.2% increase year-on-year and a 2.8% quarterly growth in output. However, waste collection activities dipped by 4.8% over the quarter, reflecting inefficiencies in the system.
Despite ongoing difficulties in the energy sector, the industrial sector’s strong performance in Q2 2024 offers an optimistic outlook for the remainder of the year. Sustained global demand for natural resources, particularly from the mining sector, coupled with enhanced production capacities in key manufacturing areas, could support further growth.
However, experts caution that the energy sector’s instability remains a significant risk. If not addressed, these challenges could hamper long-term growth and limit the industrial sector’s potential.
To mitigate these risks, investment in energy infrastructure and improved distribution networks is essential. Additionally, targeted interventions to stabilize supply chains and reduce production costs could further enhance the manufacturing sector’s performance.
While the industrial sector’s growth in Q2 2024 was driven by strong performances in mining and manufacturing, the looming energy crisis threatens to undercut these gains. The decline in the electricity and gas sub-sector could signal deeper systemic issues, particularly as energy remains a critical factor in sustaining industrial output. The government’s ability to stabilize energy production and resolve distribution challenges will be crucial to maintaining the sector’s momentum going forward.
Ghana’s industrial sector has shown resilience in the face of multiple challenges, particularly in mining and manufacturing. However, energy instability remains a major threat to future growth. The government’s response to this issue will likely determine whether the sector can continue its positive trajectory or face a slowdown in the coming quarters.