Editorial: The Economic Revival Is Real

The economic indicators available to the Bank of Ghana suggest that economic activity remains robust through the first quarter of 2006. The Bank of Ghana?s Composite Index of Economic Activity increased in nominal, and real terms, during the first quarter of 2006 as the economy continued on a cyclical upswing, rising by 4.8 percent as compared to 4.5 percent in the last quarter of 2005. In fact, the Index rose by 4.1 percent in real terms in the quarter, compared with 2.0 percent in the preceding quarter.

Major components of the index, indicators such as imports, exports, port activities, private sector contributions to SSNIT on behalf of employees, industrial electricity consumption, credit to the private sector, tourist arrivals, and cement sales recorded above trend increases during the quarter.

But there were some soft spots. Domestic VAT collections as well as monthly sales of some key enterprises declined during the quarter in a pattern observed in the past. As at the end of April 2006, cumulative purchases for the 2005/2006 main cocoa season amounted to 524,900 metric tonnes, close to the projected total purchases for the season of 550,000 metric tonnes and 9.3 percent above last year?s level. The Bank of Ghana Survey of Business Confidence also indicates that business confidence in the economy edged up during the first quarter of 2006.

One typical area enjoying rapid expansion is domestic credit. Credit to the private sector and public institutions by the local banks expanded by ?5,559.0 billion (an increase of 42.1 percent) in the twelve months to March 2006. As further evidence that the Golden Age of Business is here for real, the private sector accounted for 64.2 percent of the credit growth.

Consumption is very high. This can be seen in the rapid growth of imports in the first quarter of 2006, with non-oil imports provisionally estimated at $1,141.5 million, compared with $948.8 million for the same period last year, an increase of 20.0 percent. The better news is that local manufacturing is also on a sustained rise. Intermediate and capital goods accounted for 69.3 percent of total non-oil imports while consumption goods accounted for 21.9 percent.

Headline inflation (measured on a year-on-year basis) stood at 9.9 percent in March and 9.5 percent in April, coming down from 14.6 percent in January. The decline in headline inflation is also reflected in the pace of monthly price increases. The monthly increase of the CPI declined to 2.1 percent in March and further to 1.6 percent in April. For the same period in 2005, monthly prices jumped from 0.9 percent in January to 4.8 percent in February before declining to 4.2 percent in March and 2.0 percent in April. Figures that challenge the assertion by critics that Government may be playing selectivity with the inflation indicators.

What the data above shows is that the economy is certainly on a sustainable home run. Our checks show that this has been the longest sustained recovery the Ghanaian economy has enjoyed since Independence. And, if the investment in health, education and social infrastructure in an environment of rule of law and freedom of expression are anything to go by, then these are certainly the best of times for Ghana.

Our only prayer is for the majority of Ghanaians to recognise this and actively continue to work harder and participate in enjoying the fruits of their labour. Government should also not rest. There is more work to be done because our destiny is certainly not to be tagged with the stigma of poverty.