By Elorm Desewu
The Bank of Ghana’s Composite Index of Economic Activity (CIEA) has contracted sharply by 10.6 percent in May 2020 compared to 5.6 percent growth in May 2019.
According to a data from the BoG the contraction was broad-based and reflects the impact of the COVID19 pandemic on the domestic economy.
The industrial consumption of electricity fell as manufacturing companies worked below capacity, while tourist arrivals have virtually remained at a standstill due to the border closure and travel restrictions.
Imports, domestic VAT, and exports have all been impacted negatively. However, port activity, DMB’s credit to the private sector, and SSNIT contributions are beginning to record some modest gains—a sign of some early green shoots.
The business and consumer confidence surveys conducted in June 2020 showed some modest improvement in sentiments, although the level of the indices remained far below pre-pandemic levels. Low consumer demand and effects of border closure on businesses were cited as the key concerns for businesses.
The pace of growth in broad money supply (M2+) moderated in June 2020, consistent with the slowdown in economic activities. Annual growth in M2+ declined to 20.1 percent compared with 22.1 percent in the corresponding period of 2019.
The moderation in the growth of total liquidity was driven by the significant decline in Net Foreign Assets (NFA) to 6.2 percent from 22.5 percent over the same comparative periods. In terms of components, the growth in M2+ reflected mainly in currency outside banks and domestic deposits.