The Ghana Statistical Service (GSS) has conducted a workshop for journalists on the Index of Industrial Production (IIP).
The workshop held at the premises of the GSS was to educate journalists on the IIP which measures the short term changes in the volume of production in the industry sector of the economy.
IIP provides information to measure the industrial performance and helps to predict the economic status of the country.
Speaking at the workshop, Head of Business and industrial Statistics (GSS) Dr. Antony Krakah, explained that the growth in Gross Domestic Product (GDP) of the country, which is the total monetary value of all goods and services produced within the country’s borders in a specific period of time, whether quarterly or yearly can be determined by the growth in IIP thus a growth in an industrial sector of the economy.
He said IIP computation is based on a fixed basket of products adding that Firms are the primary source of data and they are selected based on the Integrated Business Establishment Survey
“Variables for the computation of IIP are weights and volume of products. The rate of growth is the relative change in IIP between periods,” he added.
Dr. Krakah said two reference periods for the computation of PPI are the weight reference (industry and product shares) and the index reference for volume comparison.
He further added that the computation is done from a dual time perspective, quarterly and annually.
He explained that the IIP helps the government to develop economic policies and help understand which sub-sector of the economy contributes positively or negatively to the industrial sector growth.
Again, he said the Producer Price Index (PPI) is a measure of the average change over time in the selling price of goods and services received by domestic producers.
A change in the PPI indicates inflation while a change in the Index of Industrial Production shows a growth in production of the industry adding that changes in PPI indicates inflation while IIP changes indicates growth in output or production.
“PPI collects prices from firms while IIP collects turnover or sales from firms, PPI is used to deflate turnover to get volume production, PPI is used to deflate nominal GDP to get real GDP,” he explained.
Dr. Krakah intimated that changes in IIP reflects volume production changes while nominal GDP changes reflects nominal output changes affected by prices levels.
“Growth in IIP can be a leading indicator for growth in GDP,” he said.
