Ghana: Impact of COVID-19 on commodities continues to cause decline in exports

 Latest data from the Bank of Ghana’s Summary of Macroeconomic and Financial Data for the period ending February 2021 shows the value of Ghana’s total exports decreased to about 2.5 billion dollars in February 2021, from the about 2.8 billion dollars recorded during the same time in 2020.

An estimated 2.2 billion dollars was spent on importing goods for the same period.

However, the report showed an increase in total imports from about 2.0 billion dollars in February 2020 to about 2.2 billion dollars for the same period in 2021.

While exports for the year under review declined in value by about 9.2 percent, imports saw an increase in value by about 9.6 percent.

The data from the Central Bank also showed that Ghana recorded a positive balance of trade of about three hundred and forty billion dollars as at the end of February 2021.

In an interview with Citi Business News, Economist with Databank, Courage Martey notes that the trend recorded across board can be attributed to the adverse impact of COVID-19 on the commodities, especially on Brent Crude.

“This is something we expected especially with the steady reopening of the economy. We expected that non-oil imports will start to pick up and that is exactly what is happening and that is why you saw almost 13% growth in non-oil imports because economic activities are bouncing back and that is the reason for the import growing by that much. On the export side, we saw a 9% decline in total exports largely because revenue from oil declined on a year-on-year basis.”

“This decline in oil is happening despite the increase in oil price on the world market because the expectation is that production or output in the oil sector will be lower this year compared to last year and if you look at the 2021 budget, it was indicated in there that total oil production for this year would amount to some 64 million barrels compared to 66 million barrels in the preceding year, so this is exactly what we are beginning to suffer. And the decline in total oil revenue, export revenue is as a result of lower output this year for the period compared to the same period last year,” he said.

As of February 2021, the value of gold hovered around nine hundred and thirty- one million dollars.

This represents a 5.5 percentage drop compared to the value of about nine hundred and eighty-five million dollars recorded during the same period in 2020.

But Courage Martey attributes the decline in gold prices to people’s expectation of economic recovery on the back of the vaccine roll-out.

“Gold recorded a slight decline this year compared to last year. This is because investors are moving slightly away from safe havens to a bit more riskier assets. It is largely because they now expect the global economy to recover on the back of the vaccine roll-out. Now, if you expect economic activities to bounce back on the back of the vaccine roll-out, you don’t want to hold all of your assets in safe havens again. Rather, you want to start taking risks with the assets for higher earning potential and so that pull-out from gold away from safe havens into more risky investment is hurting the price of gold,” he added.

Source: myjoyonline

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