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A new report by ‘IHS Markit Ghana’ has revealed that the coronavirus pandemic is having a huge negative impact and taking a toll on the country’s private sector as output has declined, jobs are being lost due to shut down of some companies, and consumer confidence is dipping to record lows.
According to the report, which focused on the month of March 2020, temporary company shutdowns and a lack of customers combined have led to the sharpest reductions in both output and new orders, with employment also falling at an unprecedented rate. This, in turn, led to companies lowering their own selling prices substantially.
Again, the report adds, the Purchasing Managers’ Index (which measures the direction of economic trends in the manufacturing and services sectors) fell more than ten index points in March, down to 41.4 from 52.6 in February – the lowest in more than six years of data collection – and represented a substantial deterioration in business conditions during the month.
When government introduced restrictions on movement to curb spread of the pandemic, business sentiments, according to the report, were impacted heavily as company shutdowns led to pessimism at a number of firms – pushing confidence to fall to a record low.
Commenting on the latest survey results, Andrew Harker, Economics Director at IHS Markit, said the March data is just a foreshadowing of how the private sector and the economy will be impacted by the pandemic in the shortest possible future.
“The March PMI data for Ghana provide sobering evidence of severe impacts the COVID-19 pandemic is already having on the country’s economy – with declines in output, new orders and employment far worse than anything else seen in more than six years of data collection so far. The supply side of operations was also affected with difficulties in sourcing materials reported – particularly those from China.
“The outbreak comes at a time when the private sector had been in a run of solid growth. The extent of overall damage to the economy will depend on how long it takes for COVID-19 to be brought under control,” he said.
Besides the report’s highlight on impacts of the coronavirus pandemic on the private sector, Finance Minister Ken Ofori-Atta told parliament last week that hotel occupancy rates are down from 70 percent to under 30 percent, and staff are being sent home.
The country, he said, is already seeing significant reductions in trade volumes and values with many countries, especially China – which constitutes the highest of Ghana’s imports and the second-highest of Ghana’s exports.
And agriculture’s growth could still be affected as a result of disruptions in the supply chain and lower demand activities. Disruptions could limit farmers’ access to inputs such as seeds, fertilisers and insecticide; uncertainty and fear could negatively impact planting decisions; and also a reduction in the volume of main agricultural exports, as a result of the general downturn in global economic activity due to the pandemic.
He added that the country should prepare to lose more than GH¢9.5billion from shortfalls in revenue from crude oil exports; non-oil tax revenue; import revenue; and further spending under the National Preparedness and Response Plan and COVID-19 Alleviation Programme (CAP) to combat the pandemic.
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