Ghana’s economy stabilizing…

…as global economy recovers
It has been one year since the collapse of the world’s largest investment bank, Lehman Brothers. The collapse of Lehman Brothers spiraled into a global economic crisis that was initially feared to hit developing countries including
Ghana hard.

The country’s resilient economy has however survived without any significant side effect of the global downturn.

Ghana’s economy is seeing signs of stabilization in the third quarter of the year and this is an indication that the effects of both monetary and fiscal policies undertaken by the country, are beginning to take hold, the Governor of the Bank of Ghana has said.

Addressing a press conference at the Bank’s headquarters in Accra, out-going governor, Dr. Paul Acquah, who was giving his final press conference as chairman of the central bank’s Monetary Policy Committee (MPC) said, latest surveys show more positive assessment of the general macroeconomic outlook; and a rebound in both business and consumer confidence, with some downward revision of inflation expectations.

According to him, data from the Bank’s Composite Index of Economic Activity (CIEA) show a slowdown in the pace of decline in economic activity.

The index, he added, which had pulled back in the first quarter, increased by 1.4 percent in the three months to July after remaining flat in the preceding quarter. But developments also show that output growth is much closer to the trend rate of some 6 percent, down from 7.3 percent in 2008.

Some of the indicators that also show that the country’s economy is doing well include the growth in foreign currency deposits.

He told the media that foreign currency deposits grew by 70.8 percent in year on year terms at the end of July 2009, but up from 49.8 per cent recorded for July 2008.

Foreign currency deposits which amounted to GH¢1.8 billion in December 2008 increased to GH¢ 2.5 billion in July 2009, compared with GH¢1.5 billion for July 2008, he said.

Dr. Acquah was optimistic that the economy overall is stabilizing. He said, “in sum, there are signs of stabilization in prices and in the exchange market. Inflation expectations are beginning to turn around.

“Consumer price inflation as well as core inflation remain high around 20 percent, but the recent monthly increases have been modest and there are signs of reduced volatility in prices and in the exchange rate of the cedi against the major currencies.”

Fiscal policy and a tightening of monetary and credit conditions, he said are putting downward pressure on prices as growth eases downward close to trend. The prime rate, was therefore, maintained at 18.5%.

Emmanuel K. Dogbevi