News Guide Africa

Tag: Composite Index of Economic Activity (CIEA)

  • Policy Rate held at 14% … amid rising global energy pressures and robust domestic growth

    Policy Rate held at 14% … amid rising global energy pressures and robust domestic growth

    By Adnan Adams Mohammed 

     

    The Monetary Policy Committee (MPC) of the Bank of Ghana has unanimously voted to maintain the Monetary Policy Rate at 14.0%, citing the need to safeguard price stability while navigating heightened global uncertainty caused by renewed geopolitical conflicts in the Middle East.

    The decision was announced following the committee’s 131st regular meeting, held from July 20 to 22, 2026, where members reviewed global and domestic macroeconomic developments and evaluated risks to the country’s inflation and growth outlook.

    Addressing journalists during the policy announcement, the central bank highlighted that renewed conflict in the Middle East has reignited volatility across global energy markets, leading to supply chain disruptions and a rebound in crude oil prices above $85 per barrel.

    “The easing of geopolitical tensions around mid-June proved short-lived. The renewed escalation of the conflict has led to another closure of the Strait of Hormuz and triggered instability in energy markets,” the MPC statement revealed. “Disinflation trends in several countries have stalled as energy prices have risen sharply, prompting many central banks to pause their monetary policy easing cycles in response to emerging inflationary risks.”

     

    Despite these headwinds, global economic activity has shown resilience, supported by substantial investments in artificial intelligence within the United States and China, leading the International Monetary Fund (IMF) to project global growth at 3.0% for July 2026.

    Strong Real Sector Growth and Credit Expansion

    On the domestic front, the central bank painted a picture of robust economic momentum, driven by strong growth in the services and industry sectors. Real GDP expanded by 6.4% in the first quarter of 2026, up from 6.2% recorded in the corresponding quarter of 2025.

    Furthermore, the Bank’s Composite Index of Economic Activity (CIEA) recorded a year-on-year growth of 13.4% in May 2026, compared to 4.4% in May 2025. This expansion was further bolstered by significant easing in credit conditions across the banking sector. The benchmark 91-day Treasury bill yield dropped to 5.3% in June 2026 from 14.7% a year earlier, while average commercial bank lending rates fell to 15.6% from 27.0%.

    In response to cheaper borrowing costs, private sector credit growth expanded sharply by 41.2% year-on-year in June 2026 (34.1% in real terms), compared to 8.6% recorded in June 2025.

    “The latest confidence surveys conducted in June 2026 showed positive consumer and business sentiments, supported by optimism about growth prospects, subdued inflation, and declining lending rates,” the committee noted.

     

    Inflation Uptick Driven by Base Effects and Transport Costs

    Headline inflation saw a moderate uptick, rising to 5.3% in June 2026 from 3.7% in May 2026, driven by higher food (3.9%) and non-food (6.3%) prices following temporary hikes in transport fares and base effects. However, the MPC emphasized that inflation remains well below the lower bound of the central bank’s medium-term target band (8\% \pm 2\%).

    “The July forecast remains broadly unchanged from the previous MPC round, with headline inflation projected to rise gradually into the target band,” the MPC stated. “Potential upward adjustment in utility tariffs, together with escalating geopolitical tensions in the Middle East and the associated increase in crude oil prices, present upside risks to the inflation outlook.”

     

    Robust External Sector and Banking Solvency

    Ghana’s external position remained firm, supported by high export earnings from cocoa and gold. The trade surplus widened significantly to $8.8 billion in the first half of 2026, up from $5.8 billion in the same period in 2025, while the current account surplus rose to $5.1 billion.

    Gross International Reserves stood at $12.9 billion at the end of June 2026 equivalent to 5.0 months of import cover providing an adequate buffer against external shocks despite higher energy import costs. On the currency market, the Ghana Cedi experienced a year-to-date depreciation of 9.5% against the US dollar as of July 17, 2026, after facing demand pressures in May.

    The banking sector also demonstrated strength, with total industry assets expanding by 30.7% to GH¢502.4 billion, while the Capital Adequacy Ratio (CAR) doubled to 20.4% from 10.6% in June 2025. Non-performing loans (NPLs) improved, declining to 16.1% from 23.1% over the same period.

    Unanimous Stance to Hold Rate

    In concluding its deliberations, the committee determined that maintaining the policy rate at 14.0% balances the need to anchor inflation expectations while supporting ongoing recovery in the real sector.

    “Given these considerations, the committee, by a unanimous decision, maintained the monetary policy rate at 14.0%,” the central bank announced. “The committee judged that the current policy stance remains appropriate to guide inflation into the medium-term target band while allowing time to assess the evolving geopolitical developments and their potential impact on the domestic economy.”

     

    The next regular meeting of the Monetary Policy Committee is scheduled for September 22 to 24, 2026, where the central bank will re-evaluate its stance based on new economic data.

     

  • Ghana’s economic growth moderates to 7.5% in Janury as agriculture and industry soften

    Ghana’s economic growth moderates to 7.5% in Janury as agriculture and industry soften

    Ghana’s economy began the 2026 fiscal year on a steady but moderated note, with the Monthly Indicator of Economic Growth (MIEG) slowing to 7.5% in January, according to the latest data from the Ghana Statistical Service (GSS).

    While the figure represents a continued expansion of the national economy, it marks a slight deceleration from the 8.2% growth rate recorded during the same period in 2025, reflecting shifting dynamics across the country’s three main economic pillars.

    Services sector takes the lead

    The services sector emerged as the primary engine of growth in January, surging by 9.6%. This robust performance was largely anchored by the education, information, and communication sub-sectors, which have seen sustained investment and increased consumer demand over the last year.

    In total, services accounted for over half (54.3%) of the overall 7.5% expansion, further solidifying Ghana’s transition toward a service-led economic model.

    Softening in agriculture and industry

    The overall slowdown was primarily attributed to a loss of momentum in the agriculture and industry sectors compared to the previous year:

    ● Agriculture: Growth fell sharply to 4.5%, down from a high of 9.3% in January 2025. Analysts point to a moderation in the crops and livestock sub-sectors as the main reason for this cooling.

    ● Industry: The sector recorded a 7.2% expansion, a dip from the 9.7% seen a year ago. The slowdown was particularly evident in mining and quarrying, largely due to fluctuating oil and gas output.

    The CIEA perspective

    Complementing the GSS data, the Bank of Ghana’s Composite Index of Economic Activity (CIEA) showed a real growth of 8.4% for January 2026. While the CIEA and MIEG use slightly different methodologies, both indicators point to an economy that is growing but facing an “uneven” pattern across different sectors.

    Economists suggest that while the 7.5% rate is healthy by regional standards, the widening gap between the booming services sector and the slower-moving agriculture sector could pose risks for long-term food security and rural employment.

    Outlook for 2026

    Government Statistician Dr. Alhassan Iddrisu noted that the January figures reflect a “stabilizing” economy. However, he emphasized that sustaining this momentum will require targeted interventions to revitalize industrial value addition and boost agricultural productivity.

    As the government moves forward with its 2026 fiscal plans, the focus will likely remain on whether the burgeoning services sector can continue to carry the weight of national growth if the traditional “backbones” of industry and farming continue to soften.

     

     

  • Job unavailability on the rise

    Job unavailability on the rise

    By Elorm Desewu

    Job availability in the country has declined significantly by 8.4 percent for the first two months of 2022. The number of jobs advertised in selected print and online media, which partially gauges labour demand in the economy, decreased in February 2022 relative to the corresponding period a year ago.

    Cumulatively, the number of jobs advertised in the first two months of 2022 decreased by 4.4 percent to 5,370 from 5,618 recorded in the corresponding period of 2021. The year-on-year decline in the number of jobs advertised reflected some of the difficulties faced by businesses as a result of the coronavirus pandemic.

    In total, 2,746 job adverts were recorded as compared with 2,999 for the same period in 2021, indicating a decline of 8.4 percent year-on-year. On a month-on-month basis, the number of job vacancies in February 2022, however, increased by 4.6 percent.

    Total number of private sector SSNIT contributors, which partially gauges employment conditions, improved to 828,061 up by 2.4% year-on-year in January 2022 compared with 808,301 for the same period in 2021. On a month-on-month basis, total number of private sector SSNIT contributors decreased by 4.1 percent from the 863,094 individuals recorded in December 2021.

    The Bank’s updated Composite Index of Economic Activity (CIEA) recorded an annual growth of 4.2 percent in January 2022, compared with 13.9 percent recorded in the corresponding period of 2021.

    The consumer and business confidence surveys conducted in February 2022 revealed a softening of sentiments with business confidence declining by a greater extent. The Consumer Confidence Index eased from 88.1 in December 2021 to 87.4 in February 2022 on account of the persistent increases in fuel prices, increases in transportation fares and rising inflation.

    Businesses were concerned about the impact of these on macroeconomic conditions as well as on their short-term targets and profitability for 2022. Consequently, the Business Confidence Index dipped from 98.4 in December 2021 to 88.8 in February 2022.

    Real sector activity is expected to continue to recover, although still below potential. In the outlook, activity is expected to improve in the medium-term on the back of positive real sector expectations and rising foreign demand. However, tighter monetary conditions and the on-going fiscal consolidation are likely to moderate the pace of the recovery in the forecast horizon.