The Bank of Ghana has announced that growth in the country's domestic market remains relatively strong.
The Central Bank said the negative output gap seems to be closing at a relatively modest pace.
Speaking at a press conference by the Monetary Policy Committee (MPC) yesterday in Accra, the Governor of BoG, Dr Ernest Addison, said the medium-term outlook for growth was strong with the preparation of new oil wells, including those of AKER Energy, which had submitted a $4.4 billion plan for developing an offshore field, re-opening of operations at the Obuasi Mine and the implementation of growth-oriented government initiatives.
He added that “these are all expected to boost medium-term growth prospects,” he said, stressing that the committee views the external sector position as strong from the continued trade surplus out-turn in the first quarter of 2019, as the current account deficit continued to narrow.
According to him, Ghana's gross international reserves (GIR) position had improved and should provide a cushion to the cedi which is already making some considerable gains against all the major currencies, as sentiments wane.
The overall GDP growth for 2018 was projected at 5.6 per cent, while non-oil GDP was projected to expand at 5.8 per cent, with an average growth of 6.1 per cent for the first three quarters of 2018.
The broad expectation was that the annual target of 5.6 per cent would be realized.
Dr. Addison said “for 2019, GDP growth is projected at 7.6 per cent.”
He noted that “the pace of economic activity captured by the Bank's updated Composite Index of Economic Activity (CIEA) remained strong, recording an annual growth of 3.2 per cent in January 2019, up from 2.4 per cent in December 2018.
The governor explained that “in the same period of 2018, the CIEA registered a 3.6 per cent growth.”
He revealed that the increase in January was mainly driven by growth in domestic Value Added Tax (VAT), industrial consumption of electricity, port activity and imports.
Rising Consumer Confidence
Dr. Addison disclosed that the latest results from surveys conducted by the BoG in February 2019 showed an improvement in consumer confidence even though the recent depreciation in the cedi affected business sentiments.
He said: “Two inflation readings released by the Ghana Statistical Service (GSS) since the January MPC meeting showed inflation still within the medium-term target band. Inflation decelerated in January to 9.0 per cent from 9.4 per cent in December 2018, but inched up to 9.2 per cent in February 2019 driven by increases in non-food inflation.”
According to him, “Underlying inflationary pressures, as measured by the bank's core inflation, have continued to ease and inflation expectations remain well-anchored.”