Business Analyst - September 16

Thursday, September 16, 2021
Conflicting 2nd quarter
economic growth data emerges
• Continued from front
country.
Interestingly, the statistics
office has not commented on the
figure given by the president.
Prior to the official announcement
of the much lower
figure by the Gss on Wednesday,
the President’s figure had been
unanimously accepted as correct
and not just because it had come
from the nation’s highest official.
the Bank of Ghana’s latest Composite
Index of economic activity,
covering the 12 month period
up to May this year had recorded
a record high growth of 33.1 percent.
although the CeIa measures
economic activity as
different from the Gss’s economic
growth figures which
measure changes in the value of
the economy, both data sets tend
to loosely correlate, moving in
the same direction and having a
certain degree of quantitative
correlation. Consequently, based
on previous correlations economists
had done ‘back of the envelope
computations’ which
suggested that Ghana’s second
quarter growth, when announced
by the Gss would be
somewhere between 6 percent
and 10 percent. thus the President’s
8.9 percent announcement
fit in with such
expectations.
Indeed, when Finance MinistervKen
Ofori atta had at the
2021 mid year budget review, announced
just a marginal increase
in government’s economic
growth target for the full year
2021 from the original 5.0 percent
to 5.1 percent – an increase of just
10 basis points, shortly after the
central bank had released its
own encouraging data on surging
economic activity - many
economists felt government was
being overly conservative in its
raised expectations.
a subsequent surge in consumer
price inflation to 9.8 percent
– close to the BoG’s upper
end of its target band of between
6 percent and 10 percent – accompanied
by the fastest cedi exchange
rate depreciation in over
two years, was consequently attributed
to surging economic
growth which was putting the
economy in danger of over-heating.
such analyses have now been
put on the back burner as economists,
public policy analysts and
other stakeholders in Ghana’s
economic fortunes – both local
and foreign – now await a clarification
as to the true growth figures
and how either the
President or the Gss has presented
very wrong data. Indeed
the gap between the two is so
large that some public policy
commentators are suspecting
that neither figure is correct and
the true figure is somewhere in
between.
earlier this week the Finance
Ministry issued a press release
down playing the unflattering
sovereign credit risk ratings assigned
it recently by Moody’s and
standard & Poors – of B3 with
negative outlook and B- respectively
- and rather focusing on
the two rating agencies appreciation
of the country’s extraordinary
growth.
to be sure, even at 3.9 percent
Ghana is significantly outperforming
the average growth for
sub saharan africa in 2021
which is projected at a little over
3.0 percent.
However the sharply conflicting
second quarter growth figures
are casting a major pall over
the quality of economic data
being given by government.
Producer price inflation falls to 8.1%
… August PPI fall suggests impending
slowdown in consumer price inflation
tHe Producer price inflation (PPI) rate
for august 2021 has decreased to 8.1%,
the Ghana statistical service (Gss) has
said.
this rate represents a 0.3 percentage
point decrease in producer inflation relative
to the rate recorded in July 2021
(8.4%). this is being seen as possibly an
early indication that consumer price inflation
may slow in accordance with the
PPI;s slowdown unless producers seek to
widen their profit margins to compensate
themselves for COVId 19 induced
losses incurred last year.
the month-on-month change in producer
price index between July 2021 and
august 2021 was 0.5%.
the producer price inflation in the
mining and quarrying sub-sector decreased
by 5.4 percentage points over the
July 2021 rate of 2.2% to record -3.2% in
august 2021.
the producer inflation for the manufacturing
sub-sector, which constitutes
more than two-thirds of the total industry,
increased by 0.8 percentage points to
record 12.8%.
the utility sub-sector recorded 0.2%
inflation rate for august 2021.
In august 2020, the producer price
inflation rate for all industry was 9.0%.
the rate increased to 9.7% in september
2020 but declined consistently to record
7.0% in december 2020.
In March 2021, the rate increased to
13.0%, but in april 2021, it declined to
10.9%.
In May 2021, the rate rose to 11.8%
but decreased continuously to 8.1% in
august 2021.
In august 2021, four out of the sixteen
major groups in the manufacturing
sub-sector recorded inflation rates
higher than the sector average of 12.8%.
Manufacture of coke, refined petroleum
products and nuclear fuel recorded
the highest inflation rate of 25.3%, while
the manufacture of textiles recorded the
least inflation rate of 0.3%
the producer inflation rate in the petroleum
subsector was -5.4% in august
2020. the rate fluctuated between september
2020 (-0.3%) and december 2020
(-4.0%).
subsequently, the rate increased continuously
to pick at 31.0% in March 2021
but declined to 23.9% in June 2021. the
rate increased to record 25.3 percent in
august 2021.
the year-on-year producer inflation
for all industry was 8.1% in august 2021;
the monthly change rate was 0.5%.
the manufacturing sub-sector
recorded the highest year-on-year producer
price inflation rate of 12.8%, followed
by the utility sub-sector with
0.2%.
the Mining and Quarrying sub-sector
recorded the lowest year-on-year producer
deflation rate of -3.2%. the
manufacturing sub-sector recorded the
highest monthly inflation rate of 0.9%,
while the utility sub-sector recorded no
change in inflation (0%).
the mining and quarrying sub-sectors
recorded the least monthly deflation
rate of -0.4%.
GIADEC, Rocksure partner on
Nyinahin-Mpasaaso bauxite mine
…marks start of ambitious US$6 billion
bauxite to aluminum value chain
tHe Ghana Integrated aluminium development
Corporation (GIadeC) has announced
it is partnering with rocksure
International Company as part of efforts
to develop Ghana's Integrated aluminum
Industry (IaI).
GIadeC has selected rocksure International,
an indigenous company as its
strategic partner to develop one of four
projects being executed under the IaI
value chain initiative which is expected
to create a Us$6 billion value chain
President akufo-addo who witnessed
the signing of the agreements between
the two parties at a brief event held in
accra said that the IaI remains an integral
part of his government’s industrialization
agenda.
He stressed that his government
would ensure the implementation of the
IaI, which would involve mining, refining
and smelting are carried out in a responsible
manner.
President akufo-addo, who also
launched GIadeC’s four-project agenda
for the Integrated aluminium Industry,
further commended the Corporation for
working assiduously to select rocksure
International as its partner after a transparent,
competitive and rigorous investor
engagement process.
He said that his government will
continue to create the enabling environment
needed to attract more investors to
venture into the industry.
President akufo-addo was particularly
excited that rocksure International
is a wholly-owned Ghanaian company
and stressed that the decision further
demonstrates his commitment to the
promotion of local content and local participation.
the Minister of Lands and Natural
resources Mr. samuel abu Jinapor speaking
at the event pledged the support of
the Ministry in ensuring that government’s
vision of a fully operational and
globally competitive IaI is realized.
the Chief executive Officer of the
Ghana Integrated aluminium development
Corporation, Mr. Michael ansah for
his part emphasized that the agreement
would culminate in a joint venture partnership
between GIadeC and its new
partner rocksure International to build a
mine at Nyinahin-Mpasaaso and a refinery
solution.
the project, also referred to as Project
2, according to him is one of the four (4)
projects GIadeC is currently executing.
the projects, estimated to require
some six billion dollars to execute cumulatively,
but to be executed in phases, will
be one of the most ambitious initiatives
embarked upon since Ghana’s independence.
they would largely be driven by private
investors in partnership with the
Ghana Integrated aluminum development
Corporation (GIadeC).
the entire initiative will be implemented
in four phases, with the first
phase involving the expansion of the existing
mine at awaso in the Bibiani-anhwiaso-Bekwai
Municipal district of the
Western North region, and the building
of a bauxite refinery.
• Continued on Page 11