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Economy has rebounded strongly from pandemic though downside risks remain – BoG

Dr Maxwell Opoku Afari2e132.jpeg Dr. Maxwell Opoku-Afari is first Deputy BoG Governor

Thu, 28 Apr 2022 Source: www.ghanaweb.com

BoG forecast indicates that inflation would trend back

Real Gross Domestic Product (GDP) growth 5.4 percent in 2021, GSS

Economy is rebounding, Finance Ministry


First Deputy Governor at the Bank of Ghana (BoG) Dr. Maxwell Opoku-Afari has indicated that the economy has experienced a strong rebound from the devastating effects of the COVID-19 pandemic.

His comments come at the back of data released by the Ghana Statistical Service which detailed that Ghana’s economy grew by 5.4% in 2021 an increase from the 4.4% projection.

In a statement read on behalf of Dr. Opoku-Afari by Dr. Phillip Abradu-Otoo, Director of Research at the BoG during a training programme held for members of the Journalists For Business Advocacy (JBA), he stated that the growth of the economy is an indication of a robust economy that is pushing toward its pre-pandemic level, though downside risks remain, including potential outbreak of new variants of the Covid-19 pandemic and further headwinds from the Russia-Ukraine war.

He explained that the overall real Gross Domestic Product (GDP) growth was 5.4 percent in 2021, higher than the targeted 4.4 percent. Non-oil GDP growth was 6.3 percent.

“Headline inflation has shifted above the upper band of the medium-term target, driven mainly by food prices, upward adjustments in ex-pump petroleum prices, transport costs, and passthrough of exchange rate depreciation.

“The latest data shows that headline inflation rose sharply to 19.4 percent in March 2022 from 15.7 percent in February on the back of significant increase in food inflation. In addition to these trends, there are significant upside risks to the inflation outlook, including increased commodity prices, particularly crude oil, and intensified supply disruptions. The Bank’s forecast indicates that inflation would trend back towards the medium-term horizon over the next four quarters.

“The remarkable resilience exhibited by the banking sector over the two-year period could be attributed to the comprehensive financial sector reforms that took place before the Covid-19 pandemic struck in 2020. The sector continues to remain liquid, profitable, and well capitalized. The industry’s measure of solvency, the Capital Adequacy Ratio, has remained well above the revised regulatory 13 percent prudential limit. Asset quality, however, declined marginally,” he said.

The Finance Ministry has indicated that Ghana’s current GDP growth rate of 5.4% is an indication that the economy is rebounding after the COVID-19 pandemic.

Provisional real GDP growth rate for 2021 increased from 4.4% to 5.4% showing a positive outturn from the projected outturn by 1 percentage point.

The Sub-Saharan average growth rate also increased by 0.9 percentage points.

The economy also experienced an expansion of 0.5% in 2020.

The Ministry in a statement said, “these developments are positive and confirm the fact that the economy is rebounding post-COVID-19, the rate of debt accumulation is tapering off, and there is a slowdown in fiscal expansion with Ghana on track to return to the Fiscal Responsibility Act deficit threshold of 5% of GDP by 2024.”

Non-oil real GDP expanded from 1.0% in 2020 to 6.9% in 2021 (the highest non-oil real GDP growth rate since the rebasing was done in 2013) exceeding the target of 5.9% for the period.

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Source: www.ghanaweb.com
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