The Governor of the Bank of Ghana, Dr. Ernest Addison, has stated that the steady economic recovery from the pandemic effects since the last quarter of 2020 continued into 2021. According to him, the Bank’s measure of economic activity (the Composite Index of Economic Activity) recorded an annual growth of 11.2 percent in September, compared with 10.8 percent and 4.2 percent in the same periods of 2020 and 2019, respectively.

He has said that there has been strong growth and rebound in domestic VAT collections, industrial consumption of electricity, port activity, imports, and air-passenger arrivals.

“This sustained rebound in economic activity is underpinned by turnaround in both consumer and business sentiments, driven by perceived improvements in economic prospects, although consumers expressed some concerns about current household finances,” Dr. Addison has stated.

Dr. Ernest Addison was delivering the keynote address at the 2021 Annual Bankers Week Dinner of the Chartered Institute of Bankers in Accra on December 11, 2021.

He noted that 2021 has been a very eventful year with all the challenges and opportunities. The theme for this year’s

Celebration was “The Digital Economy of Ghana – The Strategic Role of the Banking Industry”.

Dr. Addison noted that the banking sector is mostly is the main sector in which technological innovations have had the most profound effects.

“Digital innovation and transformation has been made more significant during the pandemic. To allow the economy to benefit fully, we need to ensure that tech innovations are secure, reliable and ensure that robust infrastructures are in place to facilitate transformation in the economy,” he stated.

On the external front, he said that Ghana’s external position has continued to remain strong, despite a narrowing of the trade surplus as economy recovers and imports increase. He stated that production of key export commodities, Cocoa and Gold, remained firm although Oil output fell behind projections. At the same time, higher services outflows continued, resulting in a widening of the current account deficit to US$1.9 billion, compared with US$1.2 billion in 2020.

“The above notwithstanding, the still supportive policy environment and the effective manner in which the government managed the Corona Virus allowed confidence to remain strong in the Ghanaian economy, resulting in higher inflows from foreign direct investments, portfolio flows, in addition to the IMF SDR allocation.

“All these put together led to a balance of payments surplus of US$1.7 billion, higher than the US$334 million surplus recorded a year ago.

Dr. Addison noted that these developments supported the build-up of international reserves to US$10.8 billion (equivalent to 4.9 months of import cover) in October 2021 from US$8.6 billion (representing 4.0 months of import cover) at the end of December 2020, and provided enough cushion in the foreign exchange market as demand pressures from corporates, importers, and offshore investors increased since October 2021. Cumulatively, Ghana

Cedi recorded a year-to-date depreciation of 2.7 percent against the US dollar in November 2021, compared with 3.9 percent depreciation in the same period of 2020.

He noted that during the year, inflation steadily eased to as low as 7.5 percent in May 2021, from 11.4 percent at the peak of the pandemic in July 2020.

“More recently however, as is the case globally, inflation has trended up to 11.0 percent in October 2021, outside the medium-term target band of the Central Bank, due to both supply (food prices) and demand (petroleum price pressures) shocks. Underlying inflation pressures are also elevated, highlighting the risks to the inflation outlook,” he stated.

He stated that the economic outlook for 2022 is positive although there are some potential risks that should be closely monitored. In particular, the uncertainties surrounding food prices, petroleum price adjustments, and the potential second-round effects of these are likely to exert inflationary pressures in the outlook.

Source: Daily Serachlight