Economy will recover earlier than expected – BoG

Dr. Maxwell Opoku-Afari - Deputy Governor, Bank of Ghana

First Deputy Governor of the Bank of Ghana, Dr. Maxwell Opoku-Afari has said that, contrary to fears that the economy will take some time before getting back on track, data available to the central bank suggests that the economy is on its way to recovery faster than expected.

He was speaking with Philip Nanfuri on Business Spotlight on Accra-based MX24 TV.

According to him, even though the country experienced a contraction in business activities in the second quarter of this year, the Central Bank’s Composite Index of Economic Activity (CIEA) shows significant recovery in the third quarter.

He said “…one of the advantages we have is to have access to what we call High Frequency Leading Indicators (HFLI) – putting all those indicators together together, we now have what we call a Composite Index of Economic Activity, which helps us track short-term dynamics in economic activities and gives us a sense of where economy is going.”

Ghana’s economy, as a result of COVID-19 contracted by 3.2 percent this year against the 5.7 percent growth rate recorded in the same period last year. The virus, which led to a three-week lockdown of major parts of the country in March forced many businesses to close.

Dr. Opoku-Afari added even though there was a contraction in the second quarter, the data that BoG is picking from the CIEA and high frequency data, including credit to private sector, manufacturing, sales and a few other things shows that the economy is beginning to see some significant recovery already in the first few months of the third quarter up to September and in fact throughout the third quarter.

Dr. Opoku-Afari therefore expressed optimism that despite the earlier contraction, the country’s economy is beginning to turn the corner.

“This recovery is quite significant to the extent that we think that growth will be positive in the third quarter. If you put it that way, then the leading indicators is pointing to what we will call a V-shaped recovery because of the significant negative impact we expected as a result of the lockdown as we expected the restrictions to be prolonged but we saw that there was a gradual lifting of those restrictions”, he said.

Dr. Maxwell Opoku-Afari added that the recovery meant that “the impact on economic activities had not been as severe even though it is a contraction because -3.2% is not a small contraction but to have a turnaround in the third quarter shows that the recovery is going to be more of a V-shape than a U or a trapezoid.”


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