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The confidence businesses and consumers have in the economy picked up in the latter part of 2024 on the back of the improved macroeconomic conditions in the country, the Bank of Ghana (BoG) has said.
“The latest confidence surveys conducted in December 2024 showed an improvement in both consumer and business confidence. Consumer confidence improved largely on account of optimism about future economic conditions,” the Goversnor of BoG, Dr Ernest Addison, has stated.
Speaking at the 122nd Monetary Policy Committee (MPC) press conference in Accra on Monday to announce a new policy rate, Dr Addison, who chairs the MPC, said business confidence also picked up as firms met their short-term targets and expressed positive sentiments about company and industry prospects in line with improving macroeconomic conditions.
At the Monday’s meeting, the MPC maintained the policy rate for three consecutive times at 27 per cent, citing improved macroeconomic conditions and positive growth of the economy.
“Ghana’s Purchasing Managers’ Index (PMI), however, declined to 49.4 per cent in December 2024 from 52.5 per cent in the previous month, largely due to a slowdown in firms’ operations during the election period,” he stressed.
The Governor stated that private sector credit growth continued to increase towards pre-2022 macroeconomic crisis levels, albeit slowly.
“The nominal growth in the private sector credit increased to 26.3 per cent in December 2024 from 10.7 per cent recorded in the corresponding period of 2023. In real terms, credit to the private sector increased by 2.0 per cent relative to a 10.2 per cent contraction recorded over the same comparative period in the previous year,” the Chairman of MPC said.
On the banking sector, the Governor stated that the banking sector continued to be profitable, well-capitalised and liquid.
“Assets of the banking sector grew by 33.8 per cent in 2024. Capital Adequacy Ratio (CAR) with reliefs grew marginally to 14.0 per cent in December 2024 from 13.9 per cent in December 2023. However, CAR without reliefs rose to 11.3 per cent in December 2024, higher than the 8.3 per cent recorded in December 2023. Profits went up in 2024 relative to 2023, but the pace of growth slowed, resulting in the moderation of profitability indicators during the period,” the Chairman of MPC explained.
Moreover, Dr Addison stated that the elevated credit risk remained the main upside risk to the banking sector.
“The industry’s Non-Performing Loans (NPL) ratio increased to 21.8 per cent in December 2024, up from 20.6 per cent in December 2023.
Dr Addison also indicated
Some of the participants in the maiden event listening to a presentation
that he was of the hope that the high NPL ratio would come down when the economy improved.
He said the high NPL was as a result of the macroeconomic difficulties the economy went through in the previous years.
