The Bank of Ghana (BoG) has revealed that domestic economic activity continues to reflect strong economic recovery from the adverse effects of the COVID-19 pandemic. According to BoG, its latest high frequency indicators recorded broad-based improvement in May 2021 compared to a year ago.
Recent Real Sector Indicators from the BoG show that Domestic Value Added Tax (VAT) collections, industrial consumption of electricity, and private sector contributions to social security have improved. Other indicators that exhibited improvements include vehicle registration, port activity, cement sales and passenger arrivals at the airport.
Consumer Spending
Consumer spending, measured by Domestic VAT collections and retail sales, posted a positive performance in May 2021, compared with the same period in 2020. According to the BoG, Domestic VAT collections increased by 35.3 percent on a year-on-year basis to GH¢536.10 million.
However, on a month-on-month basis, domestic VAT collections declined by 13.0 percent. Cumulatively, total domestic VAT for the first five months of 2021 went up by 31.7 percent to GH¢2,728.77 million. This compares to GH¢2,072.12 million recorded the same period last year.
Also, retail sales increased to GH¢560.64 million in the first five months of 2021. The Bank of Ghana attributed this to increased household consumption during the review period.
Manufacturing Activities
Likewise, Manufacturing activities in the manufacturing sub-sector also improved in May 2021. The BoG gauges manufacturing sector activities by trends in the collection of direct taxes and private sector workers’ contributions to the SSNIT Pension Scheme (Tier-1).
Regarding Direct Taxes, BoG indicated that Total Direct Taxes collected in May 2021 amounted to GH¢1,466.34 million, relative to GH¢1,156.19 million recorded in a similar period in 2020. This represents a year-on-year growth of 26.8 percent.
Cumulatively, BoG noted that total Direct Taxes collected for the first five months of 2021 went up by 32.0 percent to GH¢8,993.23 million. In terms of contributions of the various sub-tax categories, Income tax (PAYE and self-employed) accounted for 56.3 percent. On the other hand, Corporate tax and “Other Tax Sources” contributed 31.7 percent and 12.0 percent respectively.
Similarly, total private sector workers’ contribution to the SSNIT Pension Scheme (Tier-1) increased by 3.9 percent in year-on-year terms to GH¢205.14 million in May 2021. This is GH¢7.77 million more than GH¢197.37 million collected during the corresponding period of 2020. In cumulative terms, the contribution for the first five months of 2021 improved by 3.6 percent to GH¢996.96 million.
Construction Sector Activities
Furthermore, the construction sector continues to enjoy a strong rebound as reflected in the rise in the volume of cement sales.
Activity in the construction sub-sector improved by 7.6 percent year-on-year in May 2021 to 356,016.77 tonnes, up from 331,024.19 tonnes recorded a year ago. Meanwhile, on a month-on-month basis, total cement sales increased marginally by 0.5 percent in May 2021. Cumulatively, cement sales for the first five months of 2021 went up by 30.1 percent to 1,773,091.21 tonnes. The rise, the BoG said, is “on the back of increased construction activities during the review period”.
Vehicle Registration
Also, the recent data revealed improvement in transport sector activities, gauged by vehicle registration by the Driver and Vehicle Licensing Authority (DVLA). The sector’s activities improved by 33.6 percent year-on-year in May 2021. This is because a total of 21,389 vehicles were registered in May 2021 compared to 16,007 registered during the corresponding period of 2020. Cumulatively, the BoG indicated that vehicles registered by DVLA within the first five months of 2021 rose by 43.1 percent to 140,082.
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