DataBank’s economic outlook for Ghana

In a recent interview with CNBC Africa, Courage Kingsley Martey, a Senior Economist at DataBank Group, provided insights into the current economic situation in Ghana amidst the challenges posed by the COVID-19 pandemic. The discussion delved into the contrasting performance of Ghana's external and domestic indicators, shedding light on the impact of the global health crisis on the country's macroeconomy. Martey highlighted the resilience of Ghana's external accounts in the face of the pandemic, while also acknowledging the weakening domestic conditions. According to the Bank of Ghana, the composite index of economic activity contracted by 10.6% in May, marking a significant downturn from the negative growth of 2.2% in March, the first such decline since 2016. This contraction underscored the challenges faced by Ghana's economy as it navigates through the uncertainties brought about by the ongoing health crisis. Martey emphasized the need for proactive measures to mitigate the adverse effects of the pandemic on various sectors of the economy. The interview also touched upon DataBank Group's economic outlook for Ghana for the latter half of the year, highlighting key findings related to growth, inflation, and GDP forecasts. While the first quarter GDP growth of 4.9% may have surpassed expectations, it represented a notable decrease from the previous year's performance, signaling a slowdown in economic activity. The onset of containment measures in the second quarter brought about a sharp decline in economic indicators, with the prospect of a contraction in Q2 looming large. Inflationary pressures were also a point of discussion, with expectations of inflation remaining above the upper band of 10% throughout the year and into the next. Supply side disruptions and heightened demand due to panic buying were cited as key drivers of inflation. Additionally, DataBank Group revised its GDP growth forecast for Ghana, anticipating a significant contraction in key sectors such as hospitality, construction, and trade. While a recovery is expected in the third quarter, it may not be robust enough to offset the downturn experienced in Q2. The interview also touched upon investor sentiment in Ghana's financial markets, with a notable interest in fixed income securities compared to the struggling equity market. Despite challenges in the equity space, fixed income markets have witnessed increased interest, primarily from resident portfolio investors. Overall, the economic analysis provided by DataBank Group offers a nuanced perspective on Ghana's economic outlook amid the unprecedented challenges posed by the COVID-19 pandemic.