Ghana’s 2020 economic growth will probably surpass the official projection of 0.9 percent, Databank economist Courage Kingsley Martey has said ahead of the release of provisional GDP numbers by the Ghana Statistical Service on Wednesday.
After expanding at 4.9 percent in the first quarter of last year, the economy contracted in the second and third quarters, by 3.2 percent and 1.1 percent respectively, due to the ramifications of the COVID-19 pandemic.
However, there were signs that economic activity picked up in the final quarter, with the Bank of Ghana’s (BoG) real Composite Index of Economic Activity (CIEA), which it uses to gauge the strength of the economy on an ongoing basis, rising year-on-year by 10.9 percent, 11.9 percent and 8.3 percent in October to December respectively.
Further indications of expansion were given by readings on the Ghana Purchasing Managers’ Index (PMI) during the period, which all showed an increasing trend of economic activity. The PMI measures the rate of inventory accumulation by firm managers.
“The pace of recovery, as gauged by the BoG’s Composite Index of Economic Activity (CIEA), is really strong. Key indicators like construction, ports activity, and VAT collections are showing an encouraging level of recovery. With the added impetus of elections, I won’t be surprised to see overall growth for the year surpassing 0.9 percent,” said Mr. Martey in an interview.
Real GDP would however have to expand by not less than 3 percent in the fourth quarter if overall growth for the year should exceed 0.9 percent, he added.
“The COVID restrictions on some activities during the period remain a downside risk, but I remain confident that we could just creep above the 0.9 percent for 2020.”
The government has projected the economy to recover to a growth rate of 5 percent this year. However, should the 2020 expansion turn out to be better than expected, that could increase optimism about an even stronger rebound in 2021.