Ghana’s economy recovered strongly during the second quarter of this year and is expected to continue for the remaining quarters of the year, despite the presence of covid-19.
According to Fitch Solutions, research arm of ratings agency, Fitch, its data suggests that the economy is on a strong rebound, consistent with the Bank of Ghana’s Composite Index of Economic Activity as well as Business and Consumer Confidence Survey.
During the second quarter of last year, the economy contracted by -3.2% and entered into a mild recession in the third quarter. However, it bounced back to record a modest 0.4 percentage points growth in the final quarter.
It has since been on a growth trajectory though the Central Bank’s May 2021 survey indicated that consumer confidence dipped slightly in April 2021 on account of increases in petroleum prices at the pump, new taxes, and transportation fares. At the same time, optimism of businesses observed also softened though businesses expressed confidence about their company and industry prospects, going forward.
The economy expanded by 3.1% in the first quarter of this year, aided by Construction (14.2%), Manufacturing (6.1%) as well as Information and Communication (22.1%) sub sectors.
But it was lower than what was realized the same period in 2019.
“High frequency data suggests strong recoveries in Kenya, Uganda and Ghana, while weak Q12021 Gross Domestic Product readings for South Africa and Mozambique point to a muted outlook for Southern Africa”, it pointed out.
It further said “although Ghanaian GDP data have not yet been published at the time of writing, PMI readings and the Central Bank’s composite indicator of economic activity both indicate robust growth in economic activity in the first months of 2021.”
Meanwhile, Fitch Solutions expects the Policy Rate-the rate at which Bank of Ghana lends to commercial banks to remain same at 13.5% for the rest of the year to support economic recovery.
Senior Risk Analyst in charge of sub-Saharan Africa at Fitch Solutions, William Attwell said the policy rate will be kept at it current level to stimulate economic recovery.
“Our view now is that we expect the Central Bank to hold the benchmark interest rate at its currently level -13.5% until the end of the year. This is to enable the eceonomic recovery to gain momentum in the coming months”.
He added “we expects Ghana’s economy to be among the strongest economies in sub-Sahara Africa this year, growing around 4.5%. We think vaccines rollout in the coming months will help check covid-19 infections.”
Economy expanded by 3.1% in quarter one
The Ghanaian economy expanded by 3.1% in the first quarter of this year, the lowest since the same period in 2019.
However, in the same period of 2020, the GDP growth rate was 7.0%.
According to figures from the Ghana Statistical Services, Construction (14.2%)), Manufacturing (6.1%) as well as Information and Communication (22.1%) sub sectors were the main drivers of growth for the first three months.
The Agriculture sector recorded the highest growth of 4.3% and was followed by the Services sector with a growth of 4.0%. The Industry sector expanded by a paltry 1.3%.
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