Monday, 16 December 2019

Growth in economic activity drops sharply

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By Elorm Desewu

The growth of Bank of Ghana’s Composite Index of Economic Activity (CIEA) has dropped sharply   at the end of September 2019.

The CIEA recorded an annual growth of 4.4 percent in September 2019, compared with 5.8 percent in the corresponding period of 2018. The key drivers of economic activity during the period were port activity, domestic consumption, tourist arrivals and Deposit Money Banks (DMB's) credit to the private sector.

 The Bank of Ghana’s latest confidence surveys, conducted in October 2019, pointed to improved business sentiments.

Business confidence has rebounded, due mainly to favourable company and industry prospects, positive growth outlook and declining lending rates.

Consumer sentiments, on the other hand, remained broadly unchanged from the previous survey.

Developments in monetary aggregates are consistent with the trends in aggregate demand. Growth in broad money (M2+) remained strong during the year. In year-on-year terms, growth in M2+ was 16.3 percent in October 2019. Reserve money also expanded in the review period. Growth in reserve money went up by 26.1 percent, compared with 4.3 percent over the same comparative period.

Commercial banks’ credit to the private sector has also continued to improve. Annual growth in private sector credit was 14.0 percent in October 2019, compared with 11.4 percent for the same period of 2018. In real terms, private sector credit expanded by 5.9 percent compared with 1.7 percent over the same comparative period.

The latest credit conditions survey conducted by the Bank in October 2019 pointed to an ease in the credit stance on loans to households. However, credit stance on loans to enterprises tightened, reflecting continuous efforts by the commercial banks to safeguard the quality of their loan portfolio through improved due diligence and credit risk management. 

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