• Despite the growth, the Ghana Purchasing Managers Index declined in August 2021
• The CIEA tracks short term dynamics in economic activity
The Bank of Ghana’s update of the Composite Index of Economic Activity (CIEA) for July 2021 showed a continued recovery in domestic economic activity.
According to Governor of the central bank, Dr. Ernest Addison, the real CIEA recorded a 20.0 percent year-on-year growth in July 2021, compared with 20.2 percent in June 2021, and 3.9 percent growth recorded in July 2020.
“The growth in the indicators were somewhat broad-based with port activity, imports, domestic VAT, and air-passenger arrivals accounting for the increase,” Dr. Addison said at a press conference on Monday September 27, 2021.
While domestic economic activity showed continued recovery, the Ghana Purchasing Managers Index (PMI) declined in August 2021 mainly on the back of rising input costs.
The decline, according to the central bank, was based on business sentiments softening marginally in August 2021.
“The decline in the Purchasing Managers Index was consistent with the results of the Bank’s latest confidence surveys, conducted in August 2021, and which indicated some softening of business sentiments.”
“The survey results revealed the inability of businesses to meet their short-term company targets driven by high input costs, unavailability of raw materials, weak consumer demand, and rising labour costs. Consumer confidence, on the other hand improved, reflecting optimism about current and future economic conditions.”
Governor Addison on the other hand said the pace of growth in total liquidity moderated in August 2021. Broad money supply (M2+) increased, on a year-on-year basis, by 20.2 percent in August 2021, compared with the 24.8 percent growth recorded in August 2020.
The slower growth, according to the central bank governor was due to a contraction in the Net Foreign Assets (NFA) of the banking sector.
“Reserve money, on the other hand, increased significantly by 36.7 percent, compared with 20.2 percent over the same comparative period, largely reflecting the net build-up in the Bank’s foreign reserves, higher cocoa purchases than anticipated, and continued implementation of COVID-related policy measures,” the governor added.
