CONFIDENCE IN the business sector has rebounded mainly due to favourable company and industry prospects, positive growth outlook and declining lending rates; results from the Bank of Ghana’s (BoG) latest confidence surveys have noted.
The survey, conducted in October 2019, also said “consumer sentiments, on the other hand, remained broadly unchanged from the previous survey.”
Dr Ernest Addison, governor of BoG, who disclosed this yesterday at a press conference in Accra, said on the domestic front, growth momentum continued to remain strong and had been sustained since last year.
“The Bank’s updated Composite Index of Economic Activity (CIEA) continues to show a steady pick-up in economic activity. The CIEA recorded an annual growth of 4.4 per cent in September 2019, compared with 5.8 per cent in the corresponding period of 2018. The key drivers of economic activity during the period were port activity, domestic consumption, tourist arrivals and DMB’s credit to the private sector.”
He continued that “Growth in broad money (M2+) remained strong during the year. In year-on-year terms, growth in M2+ was 16.3 per cent in October 2019. Reserve money also expanded in the review period. Growth in reserve money went up by 26.1 per cent, compared with 4.3 per cent over the same comparative period.”
Credit To Private Sector
The BoG governor also said commercial banks’ credit to the private sector had also continued to improve while annual growth in private sector credit was 14.0 per cent in October 2019, compared with 11.4 per cent for the same period of 2018.
“In real terms, private sector credit expanded by 5.9 per cent compared with 1.7 per cent 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, he said 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.
“The three readings of inflation since the release of the rebased Consumer Price Index by the Ghana Statistical Service show that inflation has remained below its central path of 8.0 per cent. Headline inflation declined from 7.8 per cent in August 2019, to 7.6 per cent in September, and has since inched up to 7.7 per cent in October on the back of the recent upward adjustment in administrative prices of electricity and water.”
BoG Maintains Policy Rate
He said the BoG had once more maintained its policy rate at 16 per cent.
The decision was based on the bank’s monetary policy committee’s assessment that risks to inflation outlook were broadly balanced.