Q3 contraction consistent with BoG's economic recovery projections – Governor

The Central Bank of Ghana has said the recent third-quarter contraction figures is consistent with its economic recovery projection.

This comes after the latest data from the Ghana Statistical Service (GSS) showed GDP growth for the country was -1.1 percent for the third quarter of 2020.

Governor of the Bank of Ghana, Dr. Ernest Addison, speaking at the University of Ghana’s Alumni lecture said growth prospects were returning to normalcy per the BoG’s survey on consumer confidence.

“Just yesterday, the Ghana Statistical Service put out an estimate of the third-quarter GDP growth suggesting that the economy contracted by 1.1 percent during the third quarter. It must be pointed out that this is consistent with the rebound view as the economy has recovered from a contraction of 3.1 percent to 1.1 percent during the quarter,” Dr Addison stated.

He added, “Recent report from the International Growth Centre (IGC) corroborates this view as employment rates and hours worked per adult which fell substantially in March and April have largely reverted to its pre-Covid levels in August and September. Headline inflation also eased to single digits at 9.8 percent in November.”

The Governor of the Bank also indicated that business confidence has also improved despite the Index remaining below pre-lockdown levels as a result of the coronavirus pandemic.

“Our latest high-frequency economic indicators, such as consumer spending, industrial consumption of electricity, and construction activities have all reached pre-lockdown levels”

Dr Addison reiterated Ghana’s financial sector still remains solvent, liquid and well-positioned due to the reforms and policy interventions meted out to improve economic growth and rebound following the clean-up exercise in 2017.

“To a large extent, the policy interventions have also helped improve soundness of the banking sector and reduced the potential adverse spillback effects that the banking sector may have had on the macro-financial landscape,” he stated.

“The sector remains robust as reflected by the strong Financial Soundness Indicators – Capital adequacy levels are above the regulatory limits, the NPL ratio has declined, and profitability remains strong,” Dr Addison concluded.