SUMMARY OF GHANA ECONOMIC AND FINANCIAL DATA – 09/20 [1]

Summary_of_Economic_Financial_Data_September-2020-1

 

SUMMARY OF GHANA ECONOMIC AND FINANCIAL DATA – 09/20 [1]

I  EXAMINE THE DEVELOPMENT OF THE ECONOMY IN GHANA IN  RECENT MONTHS.

I WILL DIVIDE THE EXAMINATION OF THE SUMMARY INTO TWO PARTS. THE FIRST PART DEALS WITH THE FOLLOWING TOPICS:

  1. PRICE DEVELOPMENTS;
  2. REAL SECTOR INDICATORS;
  3. MONEY MARKET RATES;
  4. FOREIGN EXCHANGE RATES; AND
  5. COMMODITY PRICES.

AS USUAL, YOU CAN DOWNLOAD THE SUMMARY IN PDF FORMAT AT THE BEGINNING OF THIS ARTICLE.

  1. PRICE DEVELOPMENTS

THE CONSUMER PRICE INDEX [CPI] CAME DOWN IN AUGUST FROM A PANDEMIC-CAUSED HIGH IN JULY. CONSUMER PRICE INDEX IS DEFINED AS

a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. https://www.bing.com/search?q=definition+consumer+price+index&cvid=9dd72b0f9721439ab686a902fc0704f6&pglt=547&FORM=ANNTA1&PC=HCTS

WE SEE THE CONSUMER PRICE INDEX FALLING MOSTLY BECAUSE OF A DECREASE IN FOOD PRICES, WHICH MIGHT BE SEASONALLY LINKED. NON-FOOD PRICES INCREASED MARGINALLY, EXCEPT FOR THE MONTHLY CONSUMER PRICE INFLATION. OVERALL, THESE FIGURES ALREADY INDICATE THAT THE ECONOMY IS ON THE BRINK OF RECOVERY. THIS IS ALSO UNDERLINED BY THE CORE INFLATION RATES. ALL BUT ONE – EXCLUDED ENERGY, UTILITIES AND ALL FOOD ITEMS – CAME DOWN.

2. REAL SECTOR INDICATORS

THE COMPOSITE INDEX OF ECONOMIC ACTIVITY [CIEA] SHOWED ANOTHER JUMP FORWARD IN JULY. THIS IS THE SECOND MONTH IT WENT UP AFTER  PANDEMIC-INDUCED SLIPS DOWNWARD IN THE MONTHS BEFORE. IT NOW NEARS PRE-PANDEMIC HEIGHTS. IT SHOWS THAT AFTER MONTHS OF FORCED STILLSTAND, PEOPLE WANT TO GET ACTIVE AGAIN.

FIGURES CONCERNING CONSUMER AND BUSINESS CONFIDENCE STRESS THAT. BOTH HAVE OVERCOME VIRUS-DEPTHS; CONSUMER CONFIDENCE HAS EVEN REACHED AN ALL-YEAR HIGH. ON THE OTHER HAND, BUSINESS CONFIDENCE IS ONLY ON ITS WAY TO THESE HEIGHTS.

WE CAN EXPECT NEW FIGURES CONCERNING GROSS DOMESTIC PRODUCT IN GHANA NOT BEFORE THE NEXT MEETING OF THE MPC. AVAILABLE FIGURES ONLY SHOW PANDEMIC-BASED DEVELOPMENTS. THESE ARE IN THE MINUS; THAT MEANS A NEGATIVE GDP GROWTH. BUT, NEARLY ALL AVAILABLE DATA POINT TO A POSITIVE GDP GROWTH IN THE THIRD QUARTER. THAT INDICATES THAT GHANA WILL NOT FALL INTO THE RECESSION. CONSEQUENTLY, WE CAN EXPECT A POSITIVE GDP DEVELOPMENT FOR 2020.

3. MONEY MARKET RATES

MONEY MARKET RATES ARE MIXED, WITH THE MAJORITY OF THEM GOING UP MARGINALLY. I WOULD CONSIDER THAT A POSITIVE SIGN, AS INVESTORS WILL GET MORE INTEREST FOR THEIR INVESTMENT. THIS IS BECAUSE THERE ARE NO EXTREME FLUCTUATIONS IN THE INTEREST MOVEMENTS, A SIGN OF STABILITY. DEPOSIT RATES AND TIME DEPOSITS ARE EQUALLY CONSTANT.

THE AVERAGE LENDING RATE WENT UP A LITTLE. NONETHELESS, IT IS STILL VERY MUCH BELOW ANY OTHER AVERAGE LENDING RATE IN THE LAST YEAR. THE GHANA REFERENCE RATE IS EFFECTIVELY CONSTANT AT 14.74 PERCENT. THE REFERENCE RATE IS

an interest rate benchmark used to set other interest rates.  https://www.bing.com/search?q=reference+rate+IN+CREDIT+MARKETS+definition&qs=n&form=QBRE&sp=-1&pq=reference+rate+in+credit+markets+definition&sc=0-43&sk=&cvid=AFE3A040032445ED989534A97362A893

THE STABILITY OF THE REFERENCE RATE IS AN INDICATOR THAT THE CREDIT MARKET WILL BE STABLE IN THE TIME TO COME.

4. FOREIGN EXCHANGE RATES

THE FOREIGN EXCHANGE RATES ARE MIXED. WHILE THE CEDI DEPRECIATED TOWARDS THE DOLLAR AND THE EURO, IT APPRECIATED TOWARDS THE POUND STERLING. THE DEPRECIATION AGAINST THE DOLLAR WAS LOWER THAN AGAINST THE EURO. THIS IS CAUSED BY THE DOLLAR ITSELF BEING RELATIVELY WEAK IN RECENT TIMES. THE POUND STERLING IS WEAK MAINLY BECAUSE OF THE UNCERTAINTY SURROUNDING THE BREXIT NEGOTIATIONS. IN ALL, WE CAN SEE THAT THE CEDI STABILISED IN THE LAST MONTHS.

5. COMMODITY PRICES

FINALLY FOR THIS PART, WE GET TO THE COMMODITY PRICES. THESE ARE VERY MIXED, AS THE  CORONA VIRUS ALSO INFLUENCED THEIR DEVELOPMENT.

a. OIL PRICE

OIL PRICE IS STILL VERY LOW, AS THE DEMAND FOR OIL IS NOT PICKING UP. WORLDWIDE DEVELOPMENT OF THE ECONOMIES HAS JUST STARTED – IF YOU WANT TO SEE IT POSITIVELY. THEREFORE, DEMAND FOR FUELS – ESPECIALLY FOSSILE FUELS LIKE OIL AND COAL -IS AT THE LOW END.

b. COCOA PRICE

ALTHOUGH THE PRICE FOR COCOA HAS DECREASED YEAR-TO-YEAR, WE CAN BE POSITIVE ABOUT IT. THE DECREASE IS ONLY MARGINAL, AND THE PRICE FOR COCOA IS COMPARATIVELY CONSTANT IN THE LAST MONTHS. THEREFORE, WE CAN EXPECT COCOA TO BE A STABLE INCOME EARNER FOR THE GHANAIAN ECONOMY IN THE MONTHS TO COME.

c. GOLD PRICE

GOLD WAS THE STAR IN THE MONTHS SINCE THE CORONA VIRUS HAS STARTED. AS THE ECONOMIES ARE STRUGGLING, PEOPLE ARE LOOKING FOR SAFE HAVENS FOR THEIR MONEY. GOLD IS ONE OF THESE SAFE HAVENS. ALTHOUGH THE EUPHORIA CONCERNING GOLD HAS EBBED A LITTLE, THE PRICE IS STILL ON THE HIGH SIDE. THIS IS SURELY A POSITIVE ASPECT FOR THE ECONOMY IN GHANA. ON THE OTHER HAND, WE CAN EXPECT THE GOLD PRICE TO COME DOWN SIGNIFICANTLY. THIS IS WHEN ECONOMIES START TO BECOME STRONGER AGAIN.

d. GHANA’S SITUATION CONCERNING COMMODITY PRICES

GHANA IS IN A COMPARATIVELY GOOD POSITION CONCERNING COMMODITY PRICES. WHEN OIL PRICES GO DOWN, GOLD USUALLY GOES UP, AND THE OTHER WAY ROUND. THE PANDEMIC SHOULD ALSO AFFECT COCOA PRICES, BUT FORTUNATELY FOR GHANA, UNTIL NOW IT HAS NOT.

THIS IS THE END SUMMARY OF GHANA ECONOMIC AND FINANCIAL DATA – 09/20 [1]. THE SECOND PART WILL FOLLOW IN THE NEXT DAYS WITH THE FOLLOWING TOPICS:

EXTERNAL SECTOR DEVELOPMENTS; GOVERNMENT FISCAL OPERATIONS; MONETARY INDICATORS; BANKING SECTOR INDICATORS; STOCK MARKET PERFORMANCE; PAYMENT SYSTEM DATA. A CONCLUSION WILL FINALISE THIS ARTICLE SERIES.

STAY TUNED

 

 

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