The Ghanaian economy has begun to experience some recovery as price pressures that resulted from the pandemic-related restrictions and lockdown measures in March 2020 are easing, the Governor of the Bank of Ghana (BoG) has revealed.

Dr Ernest Addison said headline inflation, after edging up sharply to 11.4 percent in July 2020, has started going down, now at 10.5 percent in August, on the back of declining food prices.

Food inflation has steadily declined from 15.1 percent in May to 11.4 percent in August, partly reflecting seasonal effects. Non-food inflation has however, increased from 8.4 percent to 9.9 percent over the review period.

Speaking at a press conference in Accra on Monday, September 28, Dr Addison said underlying inflationary pressures are also easing.

Inflation expectations of businesses, consumers, and the financial sector, derived from the Bank’s latest round of surveys, have moderated.

“The Bank’s core inflation measure, which excludes energy and utility, also declined marginally. As expected, the latest data released by the Ghana Statistical Service (GSS) confirms the full impact of the pandemic on economic activity in the second quarter of 2020. The GSS data showed that real GDP contracted by 3.2 percent in the second quarter of 2020, compared with a growth of 5.7 percent for the corresponding period in 2019. Non-oil GDP also contracted by 3.4 percent, relative to the 4.3 percent growth in the same comparative period. The Industry and Services sectors have been most affected by the pandemic, contracting by 5.7 and 2.6 percent respectively.

“The worst affected sub-sectors: Hotels & Restaurants, Trade, and Manufacturing contracted sharply by 79.4, 20.2, and 14.3 percent respectively.

“Notwithstanding the contraction in the second quarter, high frequency data available to the Bank of Ghana show some green shoots of rebound in economic activity. From the Bank of Ghana’s surveys in August, consumer confidence is bouncing back strongly and is currently above pre-lockdown levels. Consumers seem to be responding to the gradual lifting of restrictions—providing some scope for meaningful economic activities. Business confidence also increased, but yet to reach prelockdown levels. About 95 percent of businesses surveyed showed strong optimism, reflecting the improving macroeconomic conditions, stability in the exchange rate, lower input prices, moderation in lending rates, andpositive industry prospects.

“The real Composite Index of Economic Activity (CIEA) grew by 3.6 percent in July 2020, compared with a contraction of 10.6 percent recorded in May. Consumer spending, industrial consumption of electricity, and construction activities have all reached pre-lockdown levels, while tourist arrivals and port harbour activity are gradually edging upwards. In contrast, imports, exports, and private sector contributions to social security, remain below pre-lockdown levels.

“In addition to the positive trends in the CIEA, other indicators monitored by the Bank of Ghana also point to signs of a recovery. With the exception of workplace clusters, which still remained below baseline, all other indicators embodied in the google mobility data — commuting and travelling, visit to supermarkets and pharmacy, and residential activity have moved above baseline. The Ghana Purchasing Managers Index, which gauges the rate of inventory accumulation by managers of private sector firms and measures dynamics in economic activity, points to a steady rise in business activity since April 2020," he said.