Activities in the construction sector continue to surge following the significant dip in the early period of the coronavirus pandemic in the country.
Available data from the Bank of Ghana which measure construction activities by cement sales—point to significant recovery to 360,000 tonnes in September from 220,000 tonnes in April.
During the first quarter of the year, about 760,000 tonnes of cement were sold, whereas during the second and third quarters, cement sales were about 860,000 tonnes and 1.06 million tonnes, respectively.
The Governor of the Bank of Ghana, Dr. Ernest Addison, in a statement following the Monetary Policy Committee meeting last week, indicated that construction is one of the key factors contributing to economic activities, aside manufacturing and credit to the private sector.
These factors led to an annual growth of 10.5 percent in the real Composite Index of Economic Activity (CIEA) in September, compared with 4.2 percent growth a year ago, after contracting in March, April and May.
Construction growth forecast
Notwithstanding the current growth in the sector, Fitch Solutions has estimated that in the short term, the industry will expand by 5.8 percent year on year (y-o-y), down from the 7.4 percent previously projected. Beyond 2020, growth is expected to average 6.8 percent y-o-y to 2028.
Fitch said the government’s relatively high debt burden, with a debt-to-GDP ratio at 71 percent in September, has resulted in a large share of government revenues being devoted to debt servicing, which in turn reduces funds available for infrastructure spending.
“This has likely contributed to contractor payment issues and weighed on growth in the construction sector. Beyond 2020 our outlook is more positive, as we believe that a strong project pipeline across the transport, power, industrial and residential building sectors; improving government revenues due to a widening tax base; and the ready availability of Chinese financing will support an acceleration of growth in the construction industry,” it added.