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in Economy, Sub Top Stories, Sub Top Stories2

Consumer Spending expands by 6.5% in Q3 2020

Maynard Championby Maynard Champion
February 20, 2021
Reading Time: 4 mins read
Consumer Spending expands by 6.5% in Q3 2020

A shopping Mall

Consumer spending, measured by domestic VAT collections and retail sales, improved in the third quarter of 2020 by 6.5 percent year-on-year compared with figures recorded in the corresponding period of 2019.

 Domestic VAT collections increased to GH¢1,364.72 million in the third quarter of 2020 compared to GH¢1,281.65 million collected during the corresponding quarter in 2019. However, a measure of consumption activities on a quarter-on-quarter basis shows that domestic VAT grew by 6.6 percent compared with GH¢1,280.39 million collected for the second quarter of 2020.

Retailing activities also improved significantly in the third quarter of last year as retail sales increased by 45.7 percent year-on-year to GH¢286.86 million from GH¢196.86 million recorded in the corresponding quarter of 2019.

The Bank of Ghana in its Quarterly Bulletin attributed the improvement in retail sales to increased household consumption during the review period.

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The Central Bank indicated that its review of major real sector indicators of economic activity reveals an improvement in the performance of the domestic economy during the third quarter of 2020 compared with trends observed during the same period in 2019.

The Bank of Ghana further explained that the relative pick-up in real sector activities was mainly due to a gradual recovery from the adverse effects of the coronavirus outbreak.

Addison 2
Dr. Ernest Addison -Governor of the Bank of Ghana
  • Economic activity recovering faster than expected – Addison

Manufacturing-related activities, as measured by trends in the collection of direct taxes and private sector workers’ contributions to the SSNIT Pension Scheme (Tier-1), posted positive outturns during the third quarter of 2020, compared with what was observed in the same period of 2019.

Total direct taxes collected increased by 14.4 percent year-on-year to GH¢5,278.01 million in the third quarter of 2020, relative to GH¢4,613.69 million recorded for the third quarter of 2019. Total direct tax collected for the quarter under review also grew by 5.2 percent from GH¢5,015.12 million collected in the second quarter of 2020.

In terms of contribution of the various sub-tax categories, Corporate Tax accounted for 54.3 percent, followed by Income Tax with 36.2 percent, while Other Tax sources contributed 9.5 percent.

Similarly, private sector workers’ contributions to the SSNIT Pension Scheme (Tier-1) went up by 6.7 percent (year-on-year) to GH¢560.67 million in the third quarter of 2020, from GH¢525.67 million collected during the corresponding quarter of 2019. Total contribution in the review period also grew marginally by 1.6 percent when compared with GH¢551.59 million for the second quarter of 2020.

 The improvement in private workers’ contributions to the Tier-1 pension scheme, according to the Bank of Ghana, could be attributed to the registration of new employees as well as improved compliance by private sector employers.

Economic activity in the construction sub-sector, as measured by the volume of cement sales, improved by 29.2 percent year-on-year during the third quarter of 2020 to 1,056,790.08 tonnes, from 817,744.14 tonnes recorded in the third quarter of 2019.

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Similarly, total cement sales during the review period increased by 19.0 percent when compared with 887,734.28 tonnes recorded during the second quarter of 2020. The relative improvement in total cement sales was attributed to a pick-up in construction activities during the review period.

Furthermore, the consumption of electricity by industries, which is a proxy for activities within the productive sectors of the economy, went up by 13.3 percent during the third quarter of 2020, compared with the corresponding period of 2019.

Industries utilized 718.58 giga-watts of power in the third quarter of 2020, as against 633.98 giga-watts recorded for the same period in 2019. Similarly, industrial consumption of electricity increased by 10.4 percent from 650.84 giga-watts utilized for the second quarter of 2020.

The Bank of Ghana credited the relative improvement in the electricity consumed by industries to stability in power supply coupled with a rebound in industrial activity following the initial impact of the coronavirus pandemic.

READ ALSO: Second-Wave of Pandemic Could Hamper Recovery Process -BOG

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Tags: Bank of GhanaConsumer SpendingCOVID-19Dr. Ernest AddisonQuarterly BulletinVAT
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