FINANCIAL AND ECONOMIC DATA GHANA JANUARY 2020 – 1

MPC-Press-Release-January-2020-4

Summary-of-Economic-Financial-Data-January-2020

THE MONETARY POLICY COMMITTEE (MPC) OF THE BANK OF GHANA (BoG) HELD ITS JANUARY MEETING LAST WEEK. AT THE END OF IT, THE BoG PUBLISHED THE SUMMARY OF FINANCIAL AND ECONOMIC DATA FOR GHANA/JANUARY 2020. THEY ALSO PUBLISHED THE MPC PRESS RELEASE CONCERNING THE MEETING. YOU CAN DOWNLOAD BOTH DOCUMENTS AT THE BEGINNING OF THIS ARTICLE. AS USUAL, I WILL DIVIDE THE OVERVIEW OF THE DATA INTO THREE ARTICLES. FINANCIAL AND ECONOMIC DATA GHANA JANUARY 2020 – 1 DISCUSSES PRICE DEVELOPMENTS, REAL SECTOR INDICATORS, AND MONEY MARKET RATES. THE SECOND ARTICLE ON FRIDAY WILL DEAL WITH FOREIGN EXCHANGE RATES, COMMODITY PRICES, AND EXTERNAL SECTOR DEVELOPMENTS. FINALLY, MONDAY’S THIRD ARTICLE IS FOR GOVERNMENT FISCAL OPERATIONS, MONETARY INDICATORS, BANKING SECTOR INDICATORS, AND STOCK MARKET PERFORMANCE.

FIRST OF ALL, THE BANK OF GHANA LEFT THE MONETARY POLICY RATE AT 16%. OVERALL, THE CENTRAL BANK IS CAUTIOUS AND WANTS TO SEE THE FURTHER DEVELOPMENTS IN THE ECONOMY.THE BoG IN ITS PRESS RELEASE ALSO JUDGED THE PROBABLE GLOBAL AND DOMESTIC ECONOMIC DEVELOPMENT CORRECTLY. PERHAPS, THE ONLY EXCEPTION IS THE DEVELOPMENT OF THE OIL PRICE. THIS, THE BoG MIGHT SEE TOO POSITIVE. NEVERTHELESS, THERE IS MORE TO DISCUSS ABOUT THAT UNDERR THE COMMODITY PRICES. LET’S START WITH THE SEGMENTS.

  1. PRICE DEVELOPMENTS

WITH 7.9%, THE CONSUMER PRICE INDEX REMAINED WELL WITHIN OR UNDER THE RANGE OF 8+/-2%. THIS RANGE IS THE INFLATION TARGET THE CENTRAL BANK HAS SET.

THE RELATIVELY LOW INFLATION RATE IS MOSTLY DUE TO THE LOW FOOD PRICES. THESE ONLY INCREASED BY 7.2%. ON THE OTHER HAMD, NON-FOOD PRICES INCREASED BY 8.5%.

IT IS INTERESTING TO NOTE THAT THE INFLATION RATE REMAINED STABLE. THIS IS DESPITE THE CHRISTMAS SEASON JUST HAVING BEEN AROUND THE CORNER. AT THIS TIME, PRICES USUALLY GO UP. ON THE OTHER HAND, PRICES HARDLY GO DOWN AFTER CHRISTMAS.

FURTHERMORE, LET’S HAVE A LOOK AT THE CORE INFLATION RATE EXCL. ENERGY AND UTILITIES. THIS CORE INFLATION RATE IS DOWN SIGNIFICANTLY FROM 7.1% TO 6.4%. IN FACT, THE ONLY CORE INFLATION RATE THAT WENT UP MARGINALLY IS THE ONE ENERGY, UTILITIES, VOLATILE FOOD, TRANSPORTATION. IT INCREASED FROM 6.7% TO 6.8%.

ALTOGETHER, WE CAN EXPECT A STABLE INFLATION RATE IN THE COMING MONTHS.

2) REAL SECTOR DEVELOPMENT

THIS SECTOR MAINLY INCLUDES THE COMPOSITE INDEX OF ECONOMIC ACTIVITY (CIEA) AND THE GROSS DOMESTIC PRODUCT (GDP).

IN ALL, THE CIEA CONTINUED TO SHOW A POSITIVE DEVELOPMENT IN 2019, ALTHOUGH SLIGHTLY SLOWER THAN IN 2018. THE REAL CIEA FELL MORE THAN THE NOMINAL ONE. WE COULD EXPLAIN WITH SEASONAL REASONS. NONETHELESS, ECONOMIC ACTIVITY IN GHANA IS STILL IMPRESSIVE. WE CAN EXPECT IT TO REMAIN LIKE THAT THROUGHOUT THE YEAR.

THE GDP SEEN YEAR TO YEAR REMAINED EFFECTIVELY CONSTANT. IT “FELL” FROM 6.1% TO 6.0% FROM 2018 TO 2019. IN THIS CONNECTION, IT IS INTERESTING THAT THE AGRICULTURAL SECTOR HAD THE HIGHEST GDP GROWTH IN THE LAST QUARTER.  HERE, WE SEE THE IMPACT OF THE GOVERNMENT’S VARIOUS INITIATIVES, LIKE 1D1F AND PLANTING FOR FOOD AND JOBS.

THE LAST INTERESTING PART IN THIS SECTOR ARE THE TWO CONFIDENCE INDICES. WHILE THE CONSUMER CONFIDENCE WENT UP, THE BUSINESS CONFIDENCE WENT DOWN NEARLY THE SAME MARGIN. THAT CONFIRMS WHAT I WROTE IN MY LAST ARTICLE SERIES ON THIS POINT. THE CONSUMER CONFIDENCE INDEX FOLLOWS THE BUSINESS CONFIDENCE INDEX WITH SOME DELAY. AS BOTH INDICES ARE STILL HIGH, WE CAN EXPECT THAT THERE WILL NOT BE A DEEP PLUNGE SOON. THIS IS ESPECIALLY TRUE AS MOST OF THE ECONOMIC DATA POINT TO A STABLE ECONOMY.

3) MONEY MARKET RATES

AS ALREADY MENTIONED, THE MONETARY POLICY RATE REMAINED CONSTANT AT 16%. ALSO THE INTERBANK WEIGHTED AVERAGE RATE WAS NEARLY UNCHANGED. THE PRIME MARKET OF THE TREASURY INSTRUMENTS WAS ALSO NEARLY UNCHANGED, EXCEPT THE TWO-YEARS RATE. EXCEPTIONALLY, IT JUMPED FROM 19.50 TO 20.95. PERHAPS IT HAS SOMETHING TO DO WITH THE UPCOMING ELECTIONS AND MID-TERM UNCERTAINTY.

IN OPPOSITE, THE SECONDARY MARKET HAD MORE MOVEMENTS, MOSTLY UPWARD. SOME OF THEM HAD THE HIGHEST INTEREST YIELD SINCE MONTHS.

THE DEPOSIT RATES AND THE TIME DEPOSITS REMAINED THE SAME. ALSO, THE AVERAGE LENDING RATE AND THE GHANA REFERENCE RATE REMAINED NEARLY CONSTANT.

FINANCIAL AND ECONOMIC DATA GHANA JANUARY 2020 – 1 CONCLUDED WITH THESE REMARKS. STAY TUNED FOR PART 2 OF THE ARTICLE SERIES ON FRIDAY.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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