The Bank of Ghana’s Monetary Policy Committee has released data pointing to a nascent but measured economic revival in the nation, as evident in the high-frequency real sector indicators for the year leading up to May 2023. Although economic activity showed signs of rebounding, the pace of recovery remained sluggish, indicating the persistent challenges faced by the Ghanaian economy.
The updated real Composite Index of Economic Activity (CIEA) revealed a contraction of 3.7 percent in May 2023, representing a notable improvement from the previous month’s contraction of 5.4 percent. However, the current growth rate pales in comparison to the 1.7 percent recorded during the corresponding period in the previous year, underscoring the prevailing fragility of the recovery process.
A deeper analysis of the contributing factors behind the contraction during this review period unveils certain areas of concern. Notably, port activity, cement sales, credit to the private sector, and imports weighed heavily on the CIEA, exerting downward pressure on the index. Despite these challenges, some positive developments offered a glimmer of hope. Encouragingly, domestic VAT collections, industrial consumption of electricity, and exports showcased notable improvements during the same timeframe.
Ghana’s policymakers and market participants are keenly monitoring these indicators to gauge the country’s progress on the path to sustained economic stability and growth. While the modest recovery indicates a degree of resilience in the face of headwinds, concerted efforts may be required to accelerate the pace of economic revival and foster a robust and sustainable trajectory for the future.