Ghana’s economy on the path of rebound
By Elorm Desewu
Ghana’s economy is on the path of recovery with a sustained momentum in pick-up in economic activity. The Bank of Ghana’s updated Composite Index of Economic Activity (CIEA) recorded an annual growth of 13.9 percent in January 2021, the highest since December 2019, compared to 3.4 percent in the corresponding period of 2020.
The key drivers of economic activity during the period were construction, imports, industrial consumption of electricity, domestic VAT, passenger arrivals at the airport, and port activity.
The Bank’s high frequency indicators have continued to pick up, reflecting the rebound in economic activity on the domestic front.
Although business and consumer sentiments softened on the back of the surge in COVID cases in the early months of 2021, the rollout of the vaccination programme has increased optimism about the future and will further add a boost to the anticipated recovery in growth.
Even though private sector credit growth remains generally weak due to the pandemic, the rebound of input supplies evidenced by increased non-oil imports should support the ongoing rebound in economic activity.
Results from the Bank’s latest confidence surveys conducted in February 2021 showed some softening of both consumer and business sentiments. The softening of consumer confidence reflected heightened concerns about the potential re-imposition of restrictions following the upsurge in COVID-19 cases in the first two months of the year.
Similarly, business sentiments about the general economic situation also deteriorated on concerns that re-imposition of restrictions would further have detrimental consequences on the attainment of their short-term goals.
However, with the commencement of the vaccine roll out and gradual lifting of remaining restrictions, the expectation is for both business and consumer confidence to rebound.