FINANCIAL AND ECONOMIC DATA GHANA JANUARY 2020 – 2

MPC-Press-Release-January-2020-4

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

FINANCIAL AND ECONOMIC DATA GHANA JANUARY 2020 – 2 DISCUSSES THE FOLLOWING SECTORS:

— FOREIGN EXCHANGE RATES,

— COMMODITY PRICES, AND

— EXTERNAL SECTOR DEVELOPMENTS.

  1. FOREIGN EXCHANGE RATES

IT SEEMS THAT FOR WHATEVER REASON THE CEDI HAS STABILISED AGAINST THE MAJOR CURRENCIES IN THE LAST MONTHS. SINCE DECEMBER, THE CEDI APPRECIATED 1.5 PESEWAS AGAINST THE US-DOLLAR, 13 PESEWAS AGAINST THE BRITISH POUND, AND 14 PESEWAS AGAINST THE EURO.

THE STRONGER US-DOLLAR CAUSED THE LARGER APPRECIATION AGAINST THE POUND AND THE EURO. THE POUND STILL SUFFERS FROM SOME KIND OF UNCERTAINTY DUE TO BREXIT. THE EUROPEAN ECONOMY STILL APPEARS TO SHOW SOME WEAKNESS.  WE CAN SEE THAT IN THE SLOW GROWTH OF THE MAIN EUROPEAN ECONOMIES LIKE GERMANY, FRANCE, AND ITALY.

NEVERTHELESS, THE CEDI SHOWED SOME KIND OF STRENGTH IN THE LAST MONTHS. THIS IS A REFLECTION OF A PRUDENT POLICY OF THE BANK OF GHANA, WHICH DOES EVERYTHING IN ITS POWER TO STABILISE THE CEDI. THE STABILISATION OF THE FINANCIAL SECTOR IS ONE OF THE FACTORS THAT PLAYED AN IMPORTANT ROLE IN THIS ISSUE.

IN MY OPINION, WE CANNOT HOPE THAT THIS APPRECIATION WILL GO ON FOREVER. BUT, WHAT WE CAN HOPE FOR IS A SLOWER PACE OF DEPRECIATION THAN IN THE LAST YEARS.

2) COMMODITY PRICES

AS WE CAN SEE FROM THE DATA, COMMODITY PRICES DEVELOPED FAVOURABLY FOR GHANA IN THE LAST MONTHS.

THE PRICE FOR COCOA IS STILL OVER 2,500 US-DOLLARS PER TON, AND THE REALISED PRICE IS JUST UNDER THIS LEVEL.

THE GOLD PRICE FELL A LITTLE IN THE LAST MONTH. ON THE OTHER HAND, IT’S STILL AROUND THE 1,500 US-DOLLAR MARK PER OUNCE.

THE PRICE FOR BRENT CRUDE OIL IS AT THE MOMENT AROUND THE 65 DOLLAR PER BARREL, BUT VERY VOLATILE.

COMMODITY PRICES ARE USUALLY VERY VOLATILE. GOLD, E.G., IS A SAFE HAVEN WHEN THERE IS SOMETHING LIKE A CRISIS. CONSEQUENTLY, THE PRICE FOR GOLD WILL GO UP IN VIEW OF A CRISIS.

ESPECIALLY VOLATILE AT THE MOMENT IS THE PRICE FOR CRUDE OIL. THIS WILL NOT BE IN GHANA’S FAVOUR FOR NOW. ANALYSTS EXPECT THAT BECAUSE OF THE CORONAVIRUS EPIDEMY, THE DEMAND IN CHINA WILL DECREASE A CERTAIN PERCENTAGE. AS CHINA ACCOUNTS FOR 3% OF THE GLOBAL DEMAND, THIS WILL PUT THE OIL PRICE UNDER PRESSURE. EVEN ATTEMPTS BY OPEC TO CUT OIL PRODUCTION DID NOT HELP.THIS IS MAINLY BECAUSE THE PARTICIPATING COUNTRIES DID NOT FIND A CONSENT. AND ANOTHER REASON FOR PRESSURE ON THE OIL PRICE IS THE STILL LOOMING CONFLICT BETWEEN THE U.S.A. AND IRAN.

THEREFORE, GHANA BE HAPPY ABOUT THE FAVOURABLE COMMODITY PRICES AT THE MOMENT. BUT, ALSO BE CAREFUL CONCERNING THE VOLATILITY OF THE COMMODITIES. THIS IS ESPECIALLY IMPORTANT CONCERNING THE PRICE OF BRENT CRUDE OIL.

3) EXTERNAL SECTOR DEVELOPMENTS

WHEN WE LOOK AT THE TRADE BALANCE, WE ALSO SEE A POSITIVE DEVELOPMENT. EXPORTS AS WELL AS IMPORTS INCREASED. THIS IS A POSITIVE SIGN IN ITSELF, BECAUSE IT SHOWS AN UPWARD MOVEMENT OF ECONOMIC ACTIVITY.

HOWEVER, MORE IMPORTANT IS THAT EXPORTS GREW AT A FASTER PACE THAN IMPORTS. THIS LED TO AN EVEN HIGHER TRADE SURPLUS WHICH IS NOW NEARLY 2,300 MILLION US-DOLLARS.

LOOKING AT THE BALANCE OF PAYMENT, WE SEE THAT THE CURRENT ACCOUNT BALANCE WENT DEEPER INTO MINUS. HOWEVER, THIS DEVELOPMENY IS OUTPACED BY AN EVEN HIGHER INCREASE OF THE CAPITAL AND FINANCIAL ACCOUNT BALANCE. THE LATTER IMPROVED TO 4% OF GDP. THIS LED TO AN OVERALL BALANCE OF PAYMENT OF +2%.

CONSEQUENTLY, THE GROSS INTERNATIONAL RESERVES IMPROVED SIGNIFICANTLY. FURTHERMORE, THE IMPORT COVER REACHED 4 MONTHS AGAIN, THE HIGHEST SINCE FOUR MONTHS.

4) CONCLUSION OF THE SECOND PART

FINANCIAL AND ECONOMIC DATA GHANA JANUARY 2020 – 2 SHOWS THAT GENERALLY, GHANA’S ECONOMY IS ON THE RIGHT TRACK. NEVERTHELESS, THERE IS SURELY ENOUGH TO DO TO STABILISE GHANA’S POSITION AS A MIDDLE INCOME COUNTRY. OBVIOUSLY, WE WILL SEE THAT WHEN WE GET TO GOVERNMENT FISCAL OPERATIONS. THIS, AS WELL AS MONETARY INDICATORS, BANKING SECTOR INDICATORS, AND STOCK MARKET PERFORMANCE WILL FOLLOW IN THE THIRD PART. THE THIRD PART WILL THEN CONCLUDE THIS ARTICLE SERIES ON MONDAY.

STAY TUNED!

 

 

 

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